STOCK PURCHASE AGREEMENT
THIS AGREEMENT is made this 27th day of June, 2005, by and between ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇, or ▇▇▇▇ Corp., a Nevada corporation, as his nominee (the
"Purchaser") and ▇▇▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ (collectively, the
"Sellers"), significant stockholders of SARTAM INDUSTRIES, INC., a Florida
corporation ("Sartam").
WHEREAS, the Sellers jointly own 1,795,250 shares of the issued and
outstanding common stock, par value $0.01 per share, of Sartam and 164,601
shares of the issued and outstanding convertible preferred stock, second series,
par value $0.01 per share, of Sartam (collectively, the "Sartam Stock"); and
WHEREAS, the Sellers desire to sell all of their right, title and interest
in the Sartam Stock to the Purchaser as hereinafter provided; and
WHEREAS, the Purchaser desires to purchase all of the shares of the Sartam
Stock from the Sellers;
NOW, THEREFORE, in consideration of the foregoing and the following mutual
covenants and agreements, the parties hereto agree as follows:
1. Sale and Purchase. Upon the terms and subject to the conditions set
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forth in this Agreement, the Sellers shall sell, assign, and transfer to the
Purchaser all shares of the Sartam Stock owned by the Sellers at the closing of
this Agreement (the "Closing"), free and clear of all liens and encumbrances,
except those restrictions imposed by the Securities Act of 1933, as amended (the
"Securities Act") and other applicable securities laws or this Agreement, and
the Purchaser shall accept from the Sellers at the Closing all shares of the
Sartam Stock owned by the Sellers.
2. The Purchase Price. The purchase price for the Sartam Stock to be
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purchased hereunder shall be $4,400,000, which shall be payable as follows:
(a) The sum of $200,000 payable in cash at the Closing;
(b) In addition, the sum of $4,200,000 shall be payable in the
form of a promissory note of the Purchaser bearing no interest except as
otherwise provided therein (the "Note"), a copy of which is attached hereto as
Attachment A. To secure payment of the Note, the Purchaser shall execute and
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deliver to the Sellers at the Closing that certain Stock Pledge Agreement
covering the shares of the Sartam Stock to be sold hereunder in the form
attached hereto as Attachment B.
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(c) The purchase price shall be allocated for federal income tax
purposes, $1.00 to each share the common stock, par value $0.01 per share, of
Sartam issued May 17, 2005 and restricted by the May 14, 2005 Sartam Board of
Directors Meeting minutes covering a total of 490,700 shares of such common
stock and the remainder to the other shares of the Sartam Stock.
3. Escrow. At the Closing, the Sellers shall place in escrow with
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Burgess, Harrell, ▇▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇, P.A. (the "Escrow Agent"), pursuant
to the terms of that certain Escrow Agreement attached hereto as Attachment C
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(the "Escrow Agreement") the Sartam Stock to be purchased hereunder (sometimes
hereinafter referred to as the "Escrowed Shares"). The Escrowed Shares shall be
accompanied by stock powers duly executed by the Sellers in favor of the
Purchaser in the form attached hereto as Attachment D, which will be utilized to
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transfer the Escrowed Shares to the Purchaser upon satisfaction of all of the
terms of the Note, the Stock Pledge Agreement, the Escrow Agreement, the
Consulting Agreements hereinafter described (collectively, the "Other
Agreements") and this Agreement. Upon completion and satisfaction of all of the
terms hereof and the Other Agreements, the Escrow Agent shall deliver the
Escrowed Shares to the Purchaser in accordance with the Escrow Agreement free
and clear of all liens and encumbrances other than the legend required by the
Securities Act described below. So long as there has been no default under the
Other Agreements or this Agreement, the Purchaser
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shall have the right to vote the shares of the Sartam Stock to be acquired
hereunder in accordance with the Stock Pledge Agreement.
4. Restrictive Legend. All shares of the Sartam Stock to be delivered
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hereunder shall bear a restrictive legend described in the Securities Act in
substantially the following form:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE
SECURITIES LAWS AND NEITHER SUCH SHARES NOR ANY INTEREST THEREIN MAY BE OFFERED,
SOLD, PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED UNLESS A REGISTRATION STATEMENT
WITH RESPECT THERETO IS EFFECTIVE UNDER THE SECURITIES ACT AND ANY APPLICABLE
STATE SECURITIES LAWS, OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT."
5. Consulting Agreements. At the Closing, each of the Sellers will
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enter into a consulting agreement with ZANN Corp. (the "Consulting Agreements")
as described in Attachment E hereto, which will provide for payment of $10,000
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per month, beginning 30 days following the Closing, to each of the Sellers to be
payable in cash, for services to be rendered to ZANN Corp. by each of the
Sellers. Each of the Consulting Agreements will be for general business
consulting and cannot be canceled other than pursuant to the applicable terms
thereof.
The $10,000 per month may be paid with ZANN Corp. S-8 stock (the "S-8
Stock") to be issued to each of the Sellers having a value of at least $10,000
at the time of issuance. It is understood that the S-8 Stock will be sold by
each of the Sellers and the proceeds thereof will be applied to the payment of
the obligation prescribed in the Consulting Agreement for each of the Sellers.
If the proceeds from the sale of the S-8 Stock do not equal at least $10,000 per
month, ZANN Corp. will issue additional shares of the S-8 Stock so that each of
the Sellers will receive at least $10,000 each month from the sale of the S-8
Stock. The Sellers agree that any proceeds from the S-8 stock will be applied
to the $10,000 per month consulting fees. After the Consulting Agreements have
been fully performed, any overpayment held by the Sellers shall be returned to
ZANN Corp.
6. Sartam Audit. Following the Closing, the Purchaser will begin an
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audit of Sartam at the Purchaser's sole cost and expense. Each of the Sellers
shall cooperate fully and promptly with all material and reasonable requests
made by the Purchaser and its auditors in connection with the audit.
7. Construction of Packaging Machines. Following the Closing, the
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Purchaser shall cause Sartam to begin the construction of packaging machines
which will become part of the inventory of Sartam. Until complete compliance
with this Agreement and the Other Agreements, all proceeds from the sales of the
packaging machines shall be paid to Sartam.
8. Representations and Warranties of the Sellers. Where a
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representation contained in this Agreement is qualified by the phrase "to the
best of the Sellers' knowledge" (or words of similar import), such expression
means that, after having conducted a due diligence review, the Sellers believe
the statement to be true, accurate, and complete in all material respects.
Knowledge shall not be imputed nor shall it include any matters which such
person should have known or should have been reasonably expected to have known.
The Sellers represent and warrant to the Purchaser to the best of the Sellers'
knowledge as follows:
(a) Power and Authority. The Sellers have full power and
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authority to execute, deliver, and perform this Agreement and all other
agreements, certificates or documents to be delivered in connection herewith,
including, without limitation, the other agreements, certificates and documents
contemplated hereby (collectively the "Other Agreements").
(b) Binding Effect. Upon execution and delivery by the Sellers,
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this Agreement and the Other Agreements shall be and constitute the valid,
binding and legal obligations of the Sellers, enforceable against the Sellers in
accordance with the terms hereof and thereof, except as the enforceability
hereof or thereof may be subject to the effect of (i) any applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws relating
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to or affecting creditors' rights generally, and (ii) general principles of
equity (regardless of whether such enforceability is considered in a proceeding
in equity or at law).
(c) Effect. Neither the execution and delivery of this Agreement
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or the Other Agreements nor full performance by the Sellers of their obligations
hereunder or thereunder will violate or breach, or otherwise constitute or give
rise to a default under, the terms or provisions of the Articles of
Incorporation, or the Bylaws of Sartam, or, subject to obtaining any and all
necessary consents, of any contract, commitment or other obligation of Sartam or
necessary for the operation of the business of Sartam (the "Business") following
the Closing or any other material contract, commitment, or other obligation to
which Sartam is a party, or create or result in the creation of any encumbrance
on any of the property of Sartam. Sartam is not in violation of its Articles of
Incorporation, or the Bylaws, or of any indebtedness, mortgage, contract, lease,
or other agreement or commitment in any way which would materially and adversely
affect the transactions contemplated hereby.
(d) No Contracts, Arrangements, etc. There are no contracts,
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arrangements, understandings or relationships (legal or otherwise) among any of
the parties to this Agreement, or any other person with respect to any other
securities of Sartam, including but not limited to, the transfer or voting of
any of securities of Sartam, finder's fees, joint ventures, loan or option
arrangements, puts or calls, guarantees of profits, division of profits or loss,
or the giving or withholding of proxies, naming the persons with whom such
contracts, arrangements, understandings or relationships have been entered.
(e) No Consents. No consent, approval or authorization of, or
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registration, declaration or filing with any third party, including, but not
limited to, any governmental department, agency, commission or other
instrumentality, will, except such consents, if any, delivered or obtained on or
prior to the Closing, be obtained or made by the Sellers prior to the Closing to
authorize the execution, delivery and performance by the Sellers of this
Agreement or the Other Agreements.
(f) Capitalization. Sartam is authorized by its Articles of
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Incorporation to issue 15,000,000 shares of the common stock, 7,000 shares of
preferred stock, first series, and 7,500,000 shares of convertible preferred
stock, second series. As of the date of this Agreement, there are 3,717,104
shares of the common stock, 7,000 shares of preferred stock, first series, and
2,525,047 shares of convertible preferred stock, second series, duly and validly
issued and outstanding, fully paid, and non-assessable. Except for the
remaining shares of the issued and outstanding Sartam Stock and preferred stock,
first series, after taking into consideration the 1,795,250 common shares and
the 164,601 shares of the convertible preferred stock, second series issued to
the Sellers, there are no other classes of capital stock, outstanding options,
contracts, commitments, warrants, preemptive rights, agreements or any rights of
any character affecting or relating in any manner to the issuance of the Sartam
Stock or other securities or entitling anyone to acquire the Sartam Stock or
other securities of Sartam, except as disclosed on Schedule 8(f) attached
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hereto.
(g) Stock Ownership. The Sellers have good, absolute, and
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marketable title to shares of the issued and outstanding Sartam Stock. The
Sellers have the complete and unrestricted right, power and authority to cause
the sale, transfer, and assignment of the shares of the Sartam Stock pursuant to
this Agreement. The delivery of the Sartam Stock to the Purchaser as herein
contemplated will vest in the Purchaser good, absolute and marketable title to
shares of the Sartam Stock as described herein, free and clear of all liens,
claims, encumbrances, and restrictions of every kind, except those restrictions
imposed by applicable securities laws or this Agreement.
(h) Organization and Standing of Sartam. Sartam is a duly
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organized and validly existing Florida corporation in good standing, with all
requisite corporate power and authority to carry on the Business as presently
conducted. Sartam has not qualified to do business in any other jurisdiction.
(i) No Subsidiaries. Sartam has no subsidiaries.
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(j) Liabilities. Except as set forth on Schedule 8(j) attached
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hereto, Sartam does not have any liabilities.
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(k) Financial Statement. The Sellers have furnished the Purchaser
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an unaudited balance sheet of Sartam as of May 31, 2005, and the related
statement of income and retained earnings for the period covered thereby, with
an unaudited statement as of May 31, 2005 (collectively, the "Financial
Statement"). The Financial Statement (i) is in accordance with the books and
records of Sartam; (ii) fairly presents the financial condition of Sartam at
such date and the results of its operations for the period therein specified;
(iii) was prepared in accordance with reasonably acceptable accounting
principles applied upon a basis consistent with prior accounting periods; and
(iv) with respect to all contracts and commitments of Sartam, reflects adequate
reserves for all reasonably anticipated losses and costs in excess of
anticipated income that would be required under its method of accounting.
Specifically, but not by way of limitation, the Financial Statement discloses
all of the debts, liabilities, and obligations of any nature (whether absolute,
accrued, contingent, or otherwise and whether due or to become due) of Sartam on
the dates therein specified (except such debts, liabilities, and obligations as
are not required to be reflected therein in accordance with its method of
accounting). Notwithstanding the foregoing, the Sellers have no knowledge as to
Sartam's books and records prior to 2001 and make no representations or
warranties as to accounting treatment for any items prior to 2001 not reflected
on the Financial Statement.
(l) Present Status. Since the dates reflected on the Financial
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Statement, Sartam has not, except as disclosed elsewhere herein (i) incurred any
material obligations or material liabilities, absolute, accrued, contingent, or
otherwise, except current trade payables; (ii) discharged or satisfied any liens
or encumbrances, or paid any obligations or liabilities, except current
Financial Statement liabilities and current liabilities incurred since the dates
reflected on the Financial Statement, in each case, in the ordinary course of
business; (iii) declared or made any stockholder payment or distribution or
purchased or redeemed any of its securities or agreed to do so; (iv) mortgaged,
pledged, or subjected to lien, encumbrance, or charge any of its assets except
as shall be removed prior to or at the Closing; (v) canceled any material debt
or claim; (vi) sold or transferred any assets of a material value except sales
from inventory in the ordinary course of business; (vii) suffered any damage,
destruction, or loss (whether or not covered by insurance) materially affecting
its properties, business, or prospects; (viii) waived any rights of a material
value; (ix) entered into any transaction other than in the ordinary course of
business. Further, since the dates reflected on the Financial Statement, there
has not been any change in or any event or condition (financial or otherwise)
affecting the property, assets, liabilities, operations, or prospects of Sartam,
other than changes in the ordinary course of its Business, none of which has
(either when taken by itself or taken in conjunction with all other such
changes) been materially adverse.
(m) Tax Returns and Audits. As of the date of this Agreement,
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Sartam has filed all federal, state, and local tax returns as required to be
filed by it (including, but not limited to, all payroll or other employment
related tax returns), and has paid all federal, state and local taxes,
including, but not limited to all payroll and employment taxes, required to be
paid with respect to the periods covered by such returns. Sartam has not been
delinquent in the payment of any tax, assessment, or governmental charge in any
material respect, and has not had any unsatisfied tax deficiencies proposed or
assessed against it and has not executed any waiver of the statute of
limitations on the assessment or collection of any tax.
(n) Litigation. Other than as reflected on Schedule 8(n) attached
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hereto, there are no legal actions, suits, arbitrations, or other legal,
administrative or other governmental proceedings pending or threatened against
Sartam, and the Sellers are not aware of any facts which may result in any such
action, suit, arbitration, or other proceeding.
(o) Employees. As of the date of this Agreement, Sartam has one
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employee.
(p) Compliance with Laws and Regulations. Except as otherwise
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disclosed in Schedule 8(p) attached hereto, Sartam is in material compliance
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with all laws, ordinances, codes, restrictions, regulations (environmental and
otherwise) and other legal requirements applicable to the conduct of the
Business, the noncompliance with which would be likely to have a material
adverse effect on the Business; and there are no lawsuits or proceedings pending
or, threatened with respect to the foregoing.
(q) No Defaults. Other than as reflected on Schedule 8(q)
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attached hereto, Sartam is not in default under any provision of any lease,
contract, commitment, obligation, note, bond, debenture, mortgage, indenture,
security agreement, guaranty, or other instrument of indebtedness, and no
existing condition exists which,
4
with the giving of notice or the passage of time, or both, would constitute such
a default, in either case, which default is or would be likely to have a
material adverse effect on the Business.
(r) Permits and Approvals. Except as otherwise disclosed on
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Schedule 8(r) attached hereto, (i) Sartam has all permits and approvals required
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for the conduct of the Business and is not in material default under any permit,
approval or qualification, which default is likely to have a material adverse
effect on Sartam or the Business, nor is there any existing condition which,
with the giving of notice or the passage of time, or both, would constitute such
a material default; (ii) other than those items listed on Schedule 8(r) attached
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hereto, no permit, approval or qualification of any government or governmental
unit, agency, board, body or instrumentality, whether federal, state or local,
is necessary for the conduct of the Business as same has been and is being
conducted in any material respect; and (iii) there is no lawsuit or proceeding
pending or, threatened with respect to any of the foregoing.
(s) Properties. Sartam has good and marketable title in fee
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simple absolute to all real properties and good title to all other properties
and assets owned by it (except real and other properties and assets as are held
pursuant to leases or licenses), free and clear of all liens, mortgages,
security interests, pledges, charges, and encumbrances, other than as shown on
the Financial Statement, including, but not limited to a tax lien for unpaid
real estate taxes; provided, however, Sartam owns no real property. Moreover:
(i) No real property leased, licensed, or used by Sartam lies
in an area which is, or will be, subject to zoning, use, or building code
restrictions which would prohibit, and no state of facts relating to the actions
or inaction of another person or entity or their ownership, leasing, licensing,
or use of that real property in the Business in which Sartam is now engaged or
the Business in which it contemplates engaging.
(ii) The real and other properties and assets owned, leased,
or licensed by Sartam constitute all such properties and assets which are
necessary to the Business as presently conducted
(t) Patents and Trademarks. Sartam owns, possesses and has good
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title to all of the copyrights, trademarks, trademark rights, patents, patent
rights, and licenses necessary in the conduct of the Business. Sartam is not
infringing upon or otherwise acting adversely to the rights of any person,
under, or in respect to, any copyrights, trademarks, trademark rights, patents,
patent rights, or licenses owned by any person or entity, and there is no claim
or pending or, threatened action with respect thereto. Sartam has the
unrestricted right to use (free and clear of any rights or claims of others) all
trade secrets, customer lists, manufacturing and other processes incident to the
manufacture, use or sale of any and all products presently sold by it.
(u) Absence of Certain Changes or Events. Since May 31, 2005,
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there has not been any change in or any event or condition (financial or
otherwise) affecting the Business, property, assets (including cash and all
accounts receivable), liabilities, operations, or prospects of Sartam, other
than changes in the ordinary course of the Business, none of which has (either
when taken by itself or taken in conjunction with all other such changes) been
materially adverse.
(v) Purchase and Outstanding Bids. No purchase commitments of
--------------------------------
Sartam are in excess of normal, ordinary, and usual requirements of the
Business, or were made at any price in excess of the then current market price
or contained terms and conditions more onerous than those usual and customary in
the industry.
(w) No Insurance. Sartam does not carry any insurance.
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(x) Compensation of Officers and Others. Since May 31, 2005,
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there has not been any change in any compensation, commission, bonus, or other
remuneration payable to any officer, director, agent, employee, or consultant of
Sartam.
(y) Inventory. The inventory of Sartam which is reflected on the
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Financial Statement and all inventory items which have been acquired since May
31, 2005, consists of goods of such quality and in such quantities as are
salable in the ordinary course of the Business with normal markup at prevailing
market prices.
5
Each item of the inventory was valued at the then current cost, if possible, and
if not, at the then current manufacturer's regular cost sheet available to
distributors.
(z) Schedule of Assets. Disclosed on Schedule 8(z) attached
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hereto, is a schedule of assets owned by Sartam containing (i) a true and
complete listing of all property owned by Sartam as of May 31, 2005; (ii) a true
and complete legal description of all real properties in which Sartam has a
leasehold interest, together with a description of each indenture, lease,
sublease, or other instrument under which Sartam claims or holds such leasehold
interest, each of which is a good and valid leasehold interest, and all of which
are in effect and enforceable according to their respective terms; (iii) a true
and complete list of all patents, patent applications, patent licenses,
trademarks, trademark registrations, and applications therefor, trade names,
copyrights, and copyright registrations and applications therefor owned by
Sartam; and (iv) as of May 31, 2005, a true and complete list of all accounts
receivable of Sartam, together with information as to the aging of each such
account receivable.
(aa) Employment Contracts. Except as disclosed in Schedule 8(aa)
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hereto, Sartam has no employment contract, written or otherwise, with any
employee or former employee.
(bb) Compliance with Law and Other Instruments. The business and
------------------------------------------
operations of Sartam have been and are being conducted in accordance with all
applicable laws, rules and regulations of all authorities, except those which do
not (either individually or in the aggregate) materially and adversely affect
Sartam.
(cc) Contracts. Except as disclosed on Schedule 8(cc) attached
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hereto or on any other schedule attached to this Agreement, Sartam is not a
party to, or otherwise bound by any (i) material written or oral contract; (ii)
employment or consultant contract not terminable at will without cost or other
liability; (iii) labor union contracts; (iv) bonus, pension, profit sharing,
retirement, share purchase, stock option, hospitalization, group insurance, or
similar employee benefit plan; (v) any real or personal property lease, as
lessor or lessee; (vi) advertising or public relations contract; (vii) purchase,
supply or service contract, which cannot be terminated without cost or expense
to Sartam if such termination occurs with less than 30 day's notice; (viii) deed
of trust, mortgage, conditional sales contract, security agreement, pledge
agreement, trust receipt, or any other agreement or arrangement whereby any of
the assets or property of Sartam is subject to a lien, encumbrance, charge or
other restriction except such as shall be satisfied prior to the Closing; (ix)
license agreement, whether as licensee or licensor; (x) contract or agreement
involving any expenditure by Sartam of more than $5,000 in the aggregate; (xi)
contract or agreement which Sartam cannot terminate by giving less than 30 day's
notice; and (xii) contract to be performed in whole or in part more than 90 days
from the date thereof and which cannot be terminated without cost or liability
to Sartam. Other than as disclosed on Schedule 8(cc) attached hereto, Sartam
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has in all respects performed all obligations required to be performed to date,
and is not in material default in any respect under any of the contracts,
agreements, leases, documents, or other commitments to which it is a party or
otherwise bound or affected. All parties having material contracts with Sartam
are in material compliance therewith, and are not in material default thereunder
other than as disclosed on Schedule 8(cc) attached hereto.
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(dd) Authority. No consent, authorization, approval, order,
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license, certificate, or permit of or from, or declaration of filing with, any
federal, state, local, or other governmental authority or any court or other
tribunal is required by Sartam for the execution, delivery, or performance of
this Agreement by Sartam. No consent of any party to any contract, agreement,
instrument, lease, license, arrangement, or understanding to which Sartam is a
party, or to which any of its properties or assets are subject, is required for
the execution, delivery or performance of this Agreement; and the execution,
delivery, and performance of this Agreement will not violate, result in a breach
of, conflict with, or (with or without the giving of notice or the passage of
time or both) entitle any party to terminate or call a default under any
contract, agreement, instrument, lease, license, arrangement, or understanding,
or violate or result in a breach of any term of the articles of incorporation
(or other charter document) or bylaws of Sartam or violate, result in a breach
of, or conflict with any law, rule, regulation, order, judgment, or decree
binding on Sartam or to which any of its operations, business, properties, or
assets are subject.
(ee) Records. The books of account and minute books of Sartam are
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complete and correct in all material respects, and reflect all those
transactions involving its business which properly should have been set forth in
such books. Notwithstanding the foregoing, the Sellers have no knowledge as to
Sartam's books and records prior to 2001 and make no representations or
warranties as to accounting treatment for any items prior to 2001.
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(ff) Representations and Warranties True and Complete. All
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representations and warranties of the Sellers in this Agreement and the Other
Agreements are true, accurate and complete in all material respects as of the
Closing.
(gg) No Knowledge of Default. The Sellers have no knowledge that
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any representations and warranties of the Purchaser contained in this Agreement
or the Other Agreements are untrue, inaccurate or incomplete in any material
respect or that the Purchaser is in default under any term or provision of this
Agreement or the Other Agreements.
(hh) No Untrue Statements. No representation or warranty by the
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Sellers in this Agreement or in any writing furnished or to be furnished
pursuant hereto, contains or will contain any untrue statement of a material
fact, or omits, or will omit to state any material fact required to make the
statements herein or therein contained not misleading.
(ii) Reliance. The foregoing representations and warranties are
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made by the Sellers with the knowledge and expectation that the Purchaser is
placing complete reliance thereon.
9. Representations and Warranties of the Purchaser. Knowledge shall
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not be imputed nor shall it include any matters which such person should have
known or should have been reasonably expected to have known. The Purchaser
hereby represents and warrants to the Sellers as follows:
(a) Power and Authority. The Purchaser has full power and
---------------------
authority to execute, deliver and perform this Agreement and the Other
Agreements.
(b) Binding Effect. Upon execution and delivery by the Purchaser,
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this Agreement and the Other Agreements shall be and constitute the valid,
binding and legal obligations of the Purchaser enforceable against the Purchaser
in accordance with the terms hereof or thereof, except as the enforceability
hereof and thereof may be subject to the effect of (i) any applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws relating to
or affecting creditors' rights generally, and (ii) general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
(c) No Consents. No consent, approval or authorization of, or
------------
registration, declaration or filing with any third party, including, but not
limited to, any governmental department, agency, commission or other
instrumentality, will, except such consents, if any, delivered or obtained on or
prior to the Closing, be obtained or made by the Purchaser prior to the Closing
to authorize the execution, delivery and performance by the Purchaser of this
Agreement or the Other Agreements.
(d) The Purchaser's Representations and Warranties True and
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Complete. All representations and warranties of the Purchaser in this Agreement
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and the Other Agreements are true, accurate and complete in all material
respects as of the Closing.
(e) No Knowledge of the Sellers' Default. The Purchaser has no
---------------------------------------
knowledge that any of the Sellers' representations and warranties contained in
this Agreement is untrue, inaccurate or incomplete in any respect or that the
Sellers are in default under any term or provision of this Agreement or the
Other Agreements.
(f) No Untrue Statements. No representation or warranty by the
----------------------
Purchaser in this Agreement or in any writing furnished or to be furnished
pursuant hereto, contains or will contain any untrue statement of a material
fact, or omits, or will omit to state any material fact required to make the
statements herein or therein contained not misleading.
(g) Reliance. The foregoing representations and warranties are
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made by the Purchaser with the knowledge and expectation that the Sellers are
placing complete reliance thereon.
10. Actions of Sartam Pending the Closing. The Sellers agree that from
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the date hereof through the Closing:
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(a) Operations. The Sellers will use their best efforts to cause
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Sartam to (i) be operated in keeping with its customary practices and in
compliance with all applicable laws, rules and regulations; and (ii) not engage
in any transaction or make any commitment or expenditure outside of the ordinary
course of the Business.
(b) No Change in Corporate Charter. No change will be made in the
------------------------------
Articles of Incorporation or the Bylaws of Sartam, except as may be first
approved in writing by the Purchaser.
(c) No Change in Capital Structure. No change will be made in the
------------------------------
authorized or issued capital stock of Sartam, including the issuance of any
bonds, notes, or other securities.
(d) No Default. Sartam shall timely pay and/or not suffer any
-----------
default with respect to any of its contracts, commitments or obligations in any
material respect. Sartam shall also continue to pay as they become due all
accounts payable of Sartam.
(e) No Contracts. No contract or commitment will be entered into
-------------
by or on behalf of Sartam outside of the ordinary course of the Business.
(f) No Liabilities. Sartam shall not incur any obligation or
---------------
liability, outside of the ordinary course of the Business, except as may be
first approved in writing by the Purchaser.
(g) Access to Records. The Sellers shall cause Sartam to afford
-------------------
the Purchaser access, during normal business hours, to all of its business
operations, properties, books, files, and records, and will cooperate in the
Purchaser's examination thereof. No such examination, however, shall constitute
a waiver or relinquishment by the Purchaser of its right to rely upon the
Sellers' covenants, representations, and warranties made herein or pursuant
hereto. Until the Closing hereunder or the termination of this Agreement,
whichever shall occur first, and after the termination of this Agreement in the
event this Agreement does not close, the Purchaser will hold in confidence all
information so obtained by the Purchaser as a result of such examination.
(h) Compliance. The Sellers shall cause Sartam and its officers
----------
and employees to comply with all applicable provisions of this Agreement.
11. Conditions Precedent to Obligations of the Purchaser. All
----------------------------------------------------------
obligations of the Purchaser under this Agreement are subject to the
fulfillment, prior to or at the Closing, of the following conditions:
(a) Representations and Warranties True at the Closing. The
--------------------------------------------------------
representations and warranties of the Sellers herein shall be deemed to have
been made again as of the Closing, and then be true and correct, subject to any
changes contemplated by this Agreement. The Sellers shall have performed all of
the obligations to be performed by them hereunder on or prior to the Closing.
(b) Proof of Authority. The Purchaser's counsel shall have
--------------------
received evidence reasonably sufficient to such counsel that the Sellers have
all requisite authorizations necessary for consummation by the Sellers of the
transactions contemplated hereby, and there has not been issued, and there is
not in effect, any injunction or similar legal order prohibiting or restraining
consummation of any of the transactions herein contemplated, and no legal or
governmental action, proceeding or investigation which might reasonably be
expected to result in any such injunction or order is pending.
(c) Deliveries at the Closing. The Sellers shall have delivered
---------------------------
to the Purchaser at the Closing all of the documents required to be delivered
hereunder.
(d) Certification. The Sellers shall have delivered to the
-------------
Purchaser at the Closing a certificate dated as of the applicable closing,
executed by the Sellers, certifying that the conditions specified in
subparagraphs (a), (b), and (c) of this Paragraph 11 have been fulfilled.
(e) Resignations of the Sellers as Directors and Officers. The
--------------------------------------------------------
Sellers shall have delivered to the Purchaser at the Closing, their written
resignations as directors and officers of Sartam.
8
(f) Status of Litigation. With respect to any matters affecting
----------------------
Sartam and in litigation as described in Schedule 8(n), the Purchaser shall have
-------------
the right to make an independent review of such matters. If the Purchaser is
not satisfied with such review, then the Purchaser shall have the option to
terminate this Agreement.
(g) Corporate Records, etc. The Sellers shall have delivered to
------------------------
the Purchaser the originals of the Articles of Incorporation, Bylaws, minute
books, and other corporate governance materials used since the inception of
Sartam.
(h) Other Matters. All corporate and other proceedings and
--------------
actions taken in connection with the transactions contemplated hereby and all
certificates, opinions, agreements, instruments and documents mentioned herein
or incident to any such transaction shall be satisfactory in form and substance
to the Purchaser and its counsel, whose approval shall not be unreasonably
withheld.
12. Conditions Precedent to Obligations of the Sellers. All
--------------------------------------------------------
obligations of the Sellers under this Agreement are subject to the fulfillment,
prior to or at the Closing, of the following conditions:
(a) Representations and Warranties True at Closing. The
---------------------------------------------------
representations and warranties of the Purchaser herein shall be deemed to have
been made again at the Closing, and then be true and correct, subject to any
changes contemplated by this Agreement. The Purchaser shall have performed all
of the obligations to be performed by the Purchaser hereunder on or prior to the
Closing.
(b) Proof of Authority. The Sellers' counsel shall have received
-------------------
evidence reasonably sufficient to such counsel that the Purchaser has all
requisite authorizations necessary for consummation by the Purchaser of the
transactions contemplated hereby, and there has not been issued, and there is
not in effect, any injunction or similar legal order prohibiting or restraining
consummation of any of the transactions herein contemplated, and no legal or
governmental action, proceeding or investigation that might reasonably be
expected to result in any such injunction or order is pending.
(c) Certification. The Purchaser shall have delivered to the
-------------
Sellers at the Closing a certificate dated as of the applicable closing,
executed by the Purchaser, certifying that the conditions specified in
subparagraphs (a) and (b) of this Paragraph 12 have been fulfilled.
(d) No Orders. There has not been issued, and there is not in
----------
effect, any injunction or similar legal order prohibiting or restraining
consummation of any of the transactions herein contemplated, and no legal or
governmental action, proceeding or investigation which might reasonably be
expected to result in any such injunction or order is pending.
(e) Other Matters. All corporate and other proceedings and
--------------
actions taken in connection with the transactions contemplated hereby and all
certificates, opinions, agreements, instruments and documents mentioned herein
or incident to any such transaction shall be satisfactory in form and substance
to the Sellers and their counsel, whose approval shall not be unreasonably
withheld.
13. The Nature and Survival of Representations, Covenants and
----------------------------------------------------------------
Warranties. All statements and facts contained in any memorandum, certificate,
----------
instrument, or other document delivered by or on behalf of the parties hereto
for information or reliance pursuant to this Agreement, shall be deemed
representations, covenants and warranties by the parties hereto under this
Agreement. All representations, covenants and warranties of the parties shall
survive the Closing and all inspections, examinations, or audits on behalf of
the parties, and shall expire six months following the Closing.
14. Indemnification by the Sellers. The Sellers agree to indemnify and
------------------------------
hold harmless the Purchaser against and in respect to all damages (as
hereinafter defined) in excess of $10,000. Damages, as used herein shall
include any claim, salary, wage, action, tax, demand, loss, cost, expense,
liability (joint or several), penalty, and other damage, including, without
limitation, counsel fees and other costs and expenses reasonably incurred in
investigating or attempting to avoid same or in opposition to the imposition
thereof, or in enforcing this indemnity, resulting to the Purchaser from any
inaccurate representation made by or on behalf of the Sellers in or pursuant to
9
this Agreement, breach of any of the warranties made by or on behalf of the
Sellers in or pursuant to this Agreement, or breach or default in the
performance by the Sellers of any of the obligations to be performed by them
hereunder.
Notwithstanding the scope of the Sellers' representations and warranties
herein, or of any individual representation or warranty, or any disclosure to
the Purchaser herein or pursuant hereto, or the definition of damages contained
in the preceding sentence, or the Purchaser's knowledge of any fact or facts at
or prior to the Closing, damages shall also include all debts, liabilities, and
obligations of any nature whatsoever (whether absolute, accrued, contingent, or
otherwise, and whether due or to become due) of Sartam, as of the date hereof
not reflected in the Financial Statement, specifically identified herein, or any
other exhibit furnished hereunder, whether known or unknown by the Sellers; all
claims, actions, demands, losses, costs, expenses, and liabilities resulting
from any litigation initiated subsequent to the Closing from causes of action
arising prior to the Closing hereunder involving Sartam or any owners thereof
other than the Sellers other than an action based upon a liability of Sartam
specifically disclosed herein; all claims, actions, demands, losses, costs,
expenses, liabilities and penalties resulting from Sartam's infringement upon
the rights of any person under or in respect to any copyrights, trademarks,
trademark rights, patents, patent rights or patent licenses represented by the
Sellers to be owned by Sartam; all claims, actions, demands, losses, costs,
expenses, liabilities or penalties resulting from Sartam's failure in any
respect to perform any obligation required by it to be performed prior to the
Closing, or by reason of any default of Sartam, prior to the Closing, under any
of the contracts, agreements, leases, documents, or other commitments to which
it is a party or otherwise bound or affected; and all losses, costs, and
expenses (including without limitation all fees and disbursements of counsel)
relating to damages.
The Sellers shall reimburse and/or pay on behalf of the Purchaser on demand
for any payment made or required to be made by the Purchaser at any time after
the Closing based upon the judgment of any court of competent jurisdiction or
pursuant to a bona fide compromise or settlement of claims, demands or actions,
in respect to the damages to which the foregoing indemnity relates. The
Purchaser shall give the Sellers written notice within 30 days after
notification of any litigation threatened or instituted against the Purchaser or
Sartam which might constitute the basis of a claim for indemnity by the
Purchaser against the Sellers. The Sellers shall have the right to participate
in the defense and settlement of any such litigation. In the event that the
Sellers fail to reimburse and/or pay on behalf of the Purchaser any amount which
the Purchaser is entitled to indemnification hereunder while there is any
balance remaining on the Note or the Consulting Agreements, in addition to any
other remedies either at law or in equity that may be then available to the
Purchaser, the Purchaser shall be entitled, at its option, to a credit upon the
Note and the Consulting Agreements for any amounts paid by the Purchaser, such
credit to be applied to the next maturing installments due on the Note and the
Consulting Agreements until all of such credit is utilized. In the event that
after the utilization of all of such credit the Purchaser is still entitled to
indemnity from the Sellers hereunder, the Sellers shall reimburse and/or pay the
Purchaser on demand the balance of any amount of such indemnity to which the
Purchaser is entitled hereunder.
Notwithstanding anything contained in this Agreement to the contrary, the
right to indemnification described in this paragraph shall expire three years
after the Closing hereunder, except in the case of the proven fraud by the
Sellers hereunder as determined by a court of competent jurisdiction in
connection with any such claim for indemnification, in which event such right to
indemnification shall expire one year after the discovery of such fraud.
15. Records of Sartam. For a period of five years following the
-------------------
Closing, the books of account and records of Sartam pertaining to all periods
prior to the Closing shall be available for inspection by the Sellers for use in
connection with tax audits.
16. Default by the Purchaser. If the Sellers do not default hereunder
-------------------------
and the Purchaser defaults hereunder, the Sellers may elect to terminate this
Agreement as well as any other agreement executed by the Sellers in connection
with the transactions contemplated by this Agreement, including but not limited
to any independent nondisclosure agreement or any other independent agreements,
whereupon no party shall be liable to the other hereunder, or the Sellers may
assert any remedy, including specific performance, which the Sellers may have by
reason of any such default of the Purchaser. From and after the Closing,
subject to the terms and provisions hereof, in the event of a breach by any
party of the terms of this Agreement or any obligation of a party which survives
the Closing hereunder, the other party may assert any remedy, either at law or
in equity, to which such other party may be entitled.
10
17. Default by the Sellers. If the Purchaser does not default
-------------------------
hereunder and the Sellers default hereunder, the Purchaser may elect to
terminate this Agreement as well as any other agreement executed by the
Purchaser in connection with the transactions contemplated by this Agreement,
including but not limited to any independent nondisclosure agreement or any
other independent agreements, whereupon no party shall be liable to the other
hereunder, or the Purchaser may assert any remedy, including specific
performance, which the Purchaser may have by reason of any such default of the
Sellers. From and after the Closing, subject to the terms and provisions
hereof, in the event of a breach by any party of the terms of this Agreement or
any obligation of a party which survives the Closing hereunder, the other party
may assert any remedy, either at law or in equity, to which such other party may
be entitled.
18. Cooperation. The Purchaser and the Sellers will each cooperate
-----------
with the other, at the other's request and expense, in furnishing information,
testimony, and other assistance in connection with any actions, proceedings,
arrangements, disputes with other persons or governmental inquiries or
investigations involving the Sellers' or the Purchaser's conduct of the Business
or the transactions contemplated hereby.
19. Further Conveyances and Assurances. After the Closing, each party
-----------------------------------
will, without further cost or expense to, or consideration of any nature from
the other, execute and deliver, or cause to be executed and delivered, to the
other, such additional documentation and instruments of transfer and conveyance,
and will take such other and further actions, as the other may reasonably
request as more completely to sell, transfer and assign to consummate the
transactions contemplated hereby.
20. Assignment. Notwithstanding anything herein contained to the
----------
contrary, if the Purchaser is not in default hereunder or under any of the Other
Agreements, the Purchaser may assign to ZANN Corp., a Nevada corporation, all of
his right, title, and interest in and to the Sartam Stock. In the event of any
such assignment, the Purchaser shall be relieved of any and all liability with
respect to this Agreement, the Other Agreements, or any other instrument or
obligation in connection therewith. Any such assignment shall provide that ZANN
Corp. shall be fully substituted for the Purchaser with respect to this
Agreement, the Other Agreements, or any other instrument or obligation in
connection therewith.
21. The Closing. The Closing of this Agreement shall be on or before
------------
June 27, 2005, subject to acceleration or postponement from time to time as the
parties hereto may mutually agree. The Closing shall be at ▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ at 2:00 p.m. Eastern time, unless another
hour or place is mutually agreed upon by the parties hereto.
22. Deliveries at the Closing by the Sellers. At the Closing, the
---------------------------------------------
Sellers shall deliver to the Purchaser:
(a) Certificates representing 1,795,250 shares of common stock and
164,601 shares of preferred stock duly endorsed by virtue of the executed Stock
Powers in favor of the Purchaser free and clear of all liens, claims,
encumbrances, and restrictions of every kind, except those imposed by this
Agreement, the Securities Act and other applicable securities laws.
(b) The Stock Pledge Agreement described in Attachment B.
-------------
(c) The Escrow Agreement described in Attachment C.
-------------
(d) The Stock Powers described in Attachment D.
-------------
(e) The Consulting Agreements described in Attachment E.
-------------
(f) The proof of authority described in Paragraph 11(b) hereof.
(g) The certification described in Paragraph 11(d) hereof.
(h) The resignations of the Sellers as directors and officers of
Sartam.
11
(i) The corporate records of Sartam as described in Paragraph
11(g) hereof.
(j) Any other document which may be necessary to carry out the
intent of this Agreement.
All documents reflecting any actions taken, received or delivered by the
Sellers pursuant to this Paragraph 22 shall be reasonably satisfactory in form
and substance to the Purchaser and its counsel.
23. Deliveries at the Closing by the Purchaser. At the Closing, the
---------------------------------------------
Purchaser shall deliver:
(a) The cash payment of $200,000 in immediately available funds,
to be paid by wire transfer to the Escrow Agent for the benefit of the Sellers.
(b) The Note as described in Attachment A.
-------------
(c) The Stock Pledge Agreement described in Attachment B.
-------------
(d) The Escrow Agreement described in Attachment C.
-------------
(e) The Stock Powers described in Attachment D.
-------------
(f) The Consulting Agreements described in Attachment E.
-------------
(g) The proof of authority described in Paragraph 12(b) hereof.
(h) The certification described in Paragraph 12(c) hereof.
(i) Any other document which may be necessary to carry out the
intent of this Agreement.
All documents reflecting any actions taken, received or delivered by the
Purchaser pursuant to this Paragraph 23 shall be reasonably satisfactory in form
and substance to the Sellers and their counsel.
24. Brokerage. The Sellers and the Purchaser agree to indemnify and
---------
hold harmless each other against, and in respect of, any claim for brokerage or
other commissions relative to this Agreement, or the transactions contemplated
hereby, based in any way on agreements, arrangements, understandings or
contracts made by either party with a third party or parties whatsoever.
25. Mediation and Arbitration. All disputes arising or related to this
-------------------------
Agreement or the Other Agreements must exclusively be resolved first by
mediation with a mediator selected by the parties, with such mediation to be
held in Sarasota, Florida. If such mediation fails, then any such dispute shall
be resolved by binding arbitration under the Commercial Arbitration Rules of the
American Arbitration Association in effect at the time the arbitration
proceeding commences, except that (a) Florida law and the Federal Arbitration
Act must govern construction and effect, (b) the locale of any arbitration must
be in Sarasota, Florida, and (c) the arbitrator must with the award provide
written findings of fact and conclusions of law. Any party may seek from a
court of competent jurisdiction any provisional remedy that may be necessary to
protect its rights or assets pending the selection of the arbitrator or the
arbitrator's determination of the merits of the controversy. The exercise of
such arbitration rights by any party will not preclude the exercise of any
self-help remedies (including without limitation, setoff rights) or the exercise
of any non-judicial foreclosure rights. An arbitration award may be entered in
any court having jurisdiction.
26. Attorney's Fees. In the event that it should become necessary for
----------------
any party entitled hereunder to bring suit against any other party to this
Agreement for enforcement of this Agreement, the parties hereby covenant and
agree that the party or parties who are found to be the prevailing party in such
suit shall also be entitled to recover all of its reasonable attorney's fees and
costs of court incurred to bring suit from the other party.
12
27. Benefit. All the terms and provisions of this Agreement shall be
-------
binding upon and inure to the benefit of and be enforceable by the parties
hereto, and their respective heirs, executors, administrators, personal
representatives, successors and permitted assigns.
28. Notices. All notices, requests, demands, and other communications
-------
hereunder shall be in writing and delivered personally or sent by registered or
certified United States mail, return receipt requested with postage prepaid, or
by telecopy or e-mail, if to the Purchaser, addressed to ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇-▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, telecopier
(▇▇▇) ▇▇▇-▇▇▇▇, and e-mail ▇▇▇@▇▇▇▇▇▇▇▇.▇▇▇, with a copy to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
Esq. at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, telecopier (713)
237-3202, and e-mail ▇▇▇▇▇▇▇▇▇@▇▇▇-▇▇▇.▇▇▇; and if to the Sellers, addressed to
Mr. ▇▇▇▇▇▇▇ ▇▇▇▇ at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, telecopier
(▇▇▇) ▇▇▇-▇▇▇▇, and e-mail ▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇.▇▇▇, and ▇▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, and e-mail
▇▇▇▇▇▇▇▇▇@▇▇▇.▇▇▇, with a copy to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq. at ▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, telecopier (▇▇▇) ▇▇▇-▇▇▇▇, and e-mail
▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇. Any party hereto may change its address upon 10
days' written notice to any other party hereto.
29. Construction. Words of any gender used in this Agreement shall be
------------
held and construed to include any other gender, and words in the singular number
shall be held to include the plural, and vice versa, unless the context requires
otherwise.
30. Waiver. No course of dealing on the part of any party hereto or
------
its agents, or any failure or delay by any such party with respect to exercising
any right, power or privilege of such party under this Agreement or any
instrument referred to herein shall operate as a waiver thereof, and any single
or partial exercise of any such right, power or privilege shall not preclude any
later exercise thereof or any exercise of any other right, power or privilege
hereunder or thereunder.
31. Cumulative Rights. The rights and remedies of any party under this
-----------------
Agreement and the instruments executed or to be executed in connection herewith,
or any of them, shall be cumulative and the exercise or partial exercise of any
such right or remedy shall not preclude the exercise of any other right or
remedy.
32. Invalidity. In the event any one or more of the provisions
----------
contained in this Agreement or in any instrument referred to herein or executed
in connection herewith shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality, or unenforceability
shall not affect the other provisions of this Agreement or any such other
instrument.
33. Time of the Essence. Time is of the essence of this Agreement.
----------------------
34. Incorporation by Reference. The Attachments and Schedules to this
---------------------------
Agreement referred to or included herein constitute integral parts to this
Agreement and are incorporated into this Agreement by this reference.
35. Multiple Counterparts. This Agreement may be executed in one or
----------------------
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. A facsimile transmission
of this signed Agreement shall be legal and binding on all parties hereto.
36. Controlling Agreement. In the event of any conflict between the
----------------------
terms of this Agreement or the Attachments and Schedules referred to herein, the
terms of this Agreement shall control.
37. Law Governing; Jurisdiction. This Agreement shall be governed by
-----------------------------
and construed in accordance with the laws of the State of Florida, without
regard to any conflicts of laws provisions thereof. Each party hereby
irrevocably submits to the personal jurisdiction of the United States District
Court for the Middle District of Florida, as well as of the Courts of the State
of Florida in Sarasota County, Florida, exclusively over any suit, action or
proceeding arising out of or relating to this Agreement. Each party hereby
irrevocably waives, to the fullest extent permitted by law, any objection which
it may now or hereafter have to the laying of the venue of any such
13
mediation, arbitration, suit, action or proceeding brought in any such county
and any claim that any such mediation, arbitration, suit, action or proceeding
brought in such county has been brought in an inconvenient forum.
38. Entire Agreement. This instrument and the attachments hereto
-----------------
contain the entire understanding of the parties and may not be changed orally,
but only by an instrument in writing signed by the party against whom
enforcement of any waiver, change, modification, extension, or discharge is
sought.
IN WITNESS WHEREOF, this Agreement has been executed in multiple
counterparts on the date first written above.
----------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇
----------------------------------------
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
Attachments:
-----------
Attachment A Promissory Note
Attachment B Stock Pledge Agreement
Attachment C Escrow Agreement
Attachment D Stock Powers
Attachment E Consulting Agreements
Schedule 8(f) Capitalization
Schedule 8(j) Liabilities
Schedule 8(n) Litigation
Schedule 8(p) Compliance with Laws and Regulations
Schedule 8(q) Defaults
Schedule 8(r) Permits and Approvals
Schedule 8(z) Assets
Schedule 8(aa) Employment Contracts
Schedule 8(cc) Contracts
14
ATTACHMENT A
PROMISSORY NOTE
$4,200,000 June 27, 2005
After date, without grace, for value received, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (the
"Maker") hereby promises to pay to the order of ▇▇▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, jointly (collectively, the "Payee") the original principal amount of
$4,200,000 bearing no interest. All payments of principal hereunder are payable
in lawful money of the United States of America c/o ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq. at
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, or such other place as the
Payee may designate in writing to the Maker.
The principal of this Note shall be due and payable as follows:
(a) $500,000 on December 31, 2005;
(b) $1,000,000 on March 31, 2006; and
(c) $2,700,000 on August 7, 2006.
If this Note is not paid at maturity, however maturity may be brought
about, all principal due on the date of such maturity shall bear interest from
the date of such maturity at the rate of six percent per annum.
Any interest on this Note shall be computed for the actual number of days
elapsed and on the basis of a year consisting of 360 days, unless the maximum
legal interest rate would thereby be exceeded, in which event, to the extent
necessary to avoid exceeding such maximum rate, interest shall be computed on
the basis of the actual number of days elapsed in the applicable calendar year
in which it accrued. It is the intention of the Maker and the Payee to conform
strictly to applicable usury laws. It is therefore agreed that (i) the
aggregate of all interest and other charges constituting interest under
applicable law and contracted for, chargeable or receivable under this Note or
otherwise in connection with this loan transaction, shall never exceed the
maximum amount of interest, nor produce a rate in excess of the maximum contract
rate of interest the Payee may charge the Maker under applicable law and in
regard to which the Maker may not successfully assert the claim or defense of
usury, and (ii) if any excess interest is provided for, it shall be deemed a
mistake and the same shall be refunded to the Maker or credited on the unpaid
principal balance hereof and this Note shall be automatically deemed reformed so
as to permit only the collection of the maximum legal contract rate and amount
of interest.
This Note may be prepaid in whole or in part at any time without premium or
penalty by the Maker. Prepayments shall be applied to installments of principal
in the inverse order of maturity so that they will pay the last maturing
principal installments first, and these payments will not reduce the amount or
time of payment of the remaining installments.
Except as provided herein, the Maker and each surety, endorser, and
guarantor waives all demands for payment, presentations for payment, notices of
intention to accelerate maturity, notices of acceleration of maturity, protests,
notices of protest, grace, and diligence in the collection of this Note, and in
filing suit hereon, and agrees that its liability for the payment hereof shall
not be affected or impaired by any release or change in the security or by any
extension or extensions of time of payment.
Any check, draft, money order or other instrument given in payment of all
or any portion of this Note may be accepted by the Payee or any other holder
hereof and handled in collection in the customary manner, but the same shall not
constitute payment hereunder or diminish any rights of the Payee or any other
holder hereof, except to the extent that actual cash proceeds of such instrument
are unconditionally received by the Payee or any other holder hereof and applied
to the indebtedness as herein provided.
In the event of default in the payment of this Note or under any instrument
executed in connection with this Note, the Maker agrees to pay on demand all
costs incurred by the Payee (i) in the collection of any sums, including, but
not limited to, principal, interest, expenses, and reimbursements due and
payable on this Note, and (ii) in the
1
enforcement of the other terms and provisions of this Note or any instrument
securing payment of this Note, whether such collection or enforcement be
accomplished by suit or otherwise, including the Payee's reasonable attorney's
fees.
It is agreed that time is of the essence of this Note, and upon the failure
of the Maker to cure an event of default within 30 days after receipt of notice
from the Payee or other holder of such failure, the Payee may declare the whole
sum of the principal of this Note remaining at the time unpaid, together with
the accrued interest, charges, and, to the extent permitted under applicable
law, costs and reasonable attorney's fees incurred by the Payee in collecting or
enforcing the payment thereof, immediately due and payable without further
notice, and failure to exercise said option shall not constitute a waiver on the
part of the Payee of the right to exercise the same at any other time.
Any check, draft, money order or other instrument given in payment of all
or any portion of this Note may be accepted by the Payee or any other holder
hereof and handled in collection in the customary manner, but the same shall not
constitute payment hereunder or diminish any rights of the Payee or any other
holder hereof, except to the extent that actual cash proceeds of such instrument
are unconditionally received by the Payee or any other holder hereof and applied
to the indebtedness as herein provided.
This Note is expressly subject to and governed by all of the terms and
conditions contained in that certain Stock Purchase Agreement dated June 27,
2005 (the "Stock Purchase Agreement") by and between ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, or ▇▇▇▇
Corp., as his nominee, and the Payee, the controlling stockholders of Sartam
Industries, Inc., a Florida corporation ("Sartam"), that certain Escrow
Agreement dated of even date herewith by and between the Maker and the Payee and
Burgess, Harrell, ▇▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇, P.A., and the Consulting Agreements
described in the Stock Purchase Agreement. In addition, the payment of this
Note is secured by and subject to that certain Stock Pledge Agreement of even
date herewith (the "Stock Pledge Agreement") by and between the Maker and the
Payee covering 1,795,250 shares of the issued and outstanding common stock, par
value $0.01 per share, and 164,601 shares of the issued and outstanding
convertible preferred stock, second series, par value $0.01 per share, in Sartam
(collectively, the "Sartam Stock").
Notwithstanding anything herein contained to the contrary, in the event
that ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ assigns to ZANN Corp., a Nevada corporation, as provided
in the Stock Purchase Agreement, all of his right, title, and interest in and to
the Sartam Stock, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ shall be relieved of any and all liability
with respect to this Note, the Stock Purchase Agreement, the Stock Pledge
Agreement, the Escrow Agreement, the Consulting Agreements, or any other
instrument or obligation in connection therewith. Any such assignment shall
provide that ZANN Corp. shall be fully substituted for ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ with
respect to this Note, the Stock Purchase Agreement, the Stock Pledge Agreement,
the Escrow Agreement, the Consulting Agreements, or any other instrument or
obligation in connection therewith.
In the event of any conflict between the terms of this Note, the Stock
Purchase Agreement, the Stock Pledge Agreement, the Escrow Agreement, the
Consulting Agreements, the terms of the Stock Purchase Agreement shall control.
This Note shall be governed by and construed in accordance with the laws of
the State of Florida and applicable federal law.
----------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
2
ATTACHMENT B
STOCK PLEDGE AGREEMENT
THIS AGREEMENT is made this 27th day of June, 2005, by and between ▇▇▇▇▇▇▇
▇▇▇▇ and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ (collectively, the "Secured Party") and ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇ or ZANN CORP., a Nevada corporation, as his nominee (the "Debtor").
WHEREAS, the Secured Party, pursuant to that certain Stock Purchase
Agreement dated June 27, 2005 (the "Stock Purchase Agreement") has sold to the
Debtor 1,795,250 shares of the issued and outstanding common stock, par value
$0.01 per share, and 164,601 shares of the issued and outstanding convertible
preferred stock, second series, par value $0.01 per share (collectively, the
"Sartam Stock"), in SARTAM INDUSTRIES, INC., a Florida corporation (the
"Company"); and
WHEREAS, pursuant to the Stock Purchase Agreement, the Debtor has executed
and delivered to the Secured Party that one certain promissory note of even date
herewith executed by the Debtor in the original principal amount of $4,200,000
payable to the order of the Secured Party (the "Note"); and
WHEREAS, pursuant to the Stock Purchase Agreement, the Debtor and the
Secured Party have executed that certain Escrow Agreement with Burgess, Harrell,
▇▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇, P.A. (the "Escrow Agreement"); and
WHEREAS, pursuant to the Stock Purchase Agreement, ZANN Corp., a Nevada
corporation, and the Secured Party have executed Consulting Agreements (the
"Consulting Agreements"); and
WHEREAS, all capitalized terms herein shall have the same meanings as
defined in the Stock Purchase Agreement, unless otherwise defined herein;
NOW, THEREFORE, in consideration of the foregoing and the following mutual
covenants and agreements, the parties hereto do hereby agree as follows:
1. Security Interest. The Debtor hereby grants to the Secured Party a
------------------
security interest and agrees and acknowledges that the Secured Party has and
shall continue to have a security interest in the Sartam Stock acquired by the
Debtor from the Secured Party pursuant to the Stock Purchase Agreement, together
with all monies, income, proceeds, substitutions, replacements, and benefits
attributable or accruing to said property, including, but not limited to, all
stock rights, rights to subscribe, liquidating dividends, stock dividends,
dividends paid in stock, new securities or other properties or benefits for
which the Debtor is or may hereafter become entitled to receive on account of
said property, and in the event that the Debtor shall receive any of such, the
Debtor shall hold same as trustee for the Secured Party and will immediately
deliver same to the Secured Party to be held hereunder in the same manner as the
properties specifically described above are held hereunder. All property of all
kinds in which the Secured Party is herein granted a security interest,
including, but not limited to, the Sartam Stock, shall hereinafter be referred
to as the "Collateral."
The Debtor agrees to execute such stock powers, endorse such instruments,
or execute such additional pledge agreements or other documents as may be
required by the Secured Party in order to effectively grant to the Secured Party
the security interest in the Collateral. The security interest granted hereby
is to secure the payment of any and all indebtedness and liabilities whatsoever
of the Debtor to the Secured Party whether direct or whether now existing or
hereafter arising, and howsoever evidenced or acquired, and whether joint or
several, including, but not limited to, the Stock Purchase Agreement, the Note,
the Escrow Agreement, and the Consulting Agreements, and all costs incurred by
the Secured Party to enforce this Agreement or any of the above described
agreements and instruments, including but not limited to attorney's fees and
expenses (all of such obligations, indebtedness and liabilities being
hereinafter collectively referred to as the "Obligations").
2. Warranties and Covenants of the Debtor. The Debtor, for so long as
---------------------------------------
he has any duty with respect to the Obligations, hereby warrants and covenants
as follows:
1
(a) The security interest granted hereby will attach to the
Collateral on the date hereof.
(b) Except for the security interest granted hereby and for taxes
not yet due and for restrictions imposed by applicable securities laws, the
Debtor is the owner of the Collateral free of any adverse claim, security
interest or encumbrance, and the Debtor will defend the Collateral against all
claims and demands of all persons at any time claiming the same or any interest
therein.
(c) The Debtor authorizes the Secured Party to file, in the office
of the Secretary of State of Florida, a financing statement signed only by the
Secured Party covering the Collateral, and at the request of the Secured Party,
the Debtor will join the Secured Party in executing one or more financing
statements pursuant to the Uniform Commercial Code in effect in the State of
Florida on the date hereof in a form satisfactory to the Secured Party, and the
Secured Party will pay the cost of filing the same, or filing or recording the
financing statements in all public offices wherever filing or recording is
deemed by the Secured Party to be necessary or desirable. It being further
stipulated in this regard that the Secured Party may also at any time or times
sign a counterpart of this Agreement signed by the Debtor and file same as a
financing statement if the Secured Party shall elect to do so.
(d) The Debtor will not sell or offer to sell or otherwise
transfer or encumber the Collateral or any interest therein.
(e) The Debtor will keep the Collateral free from any adverse
lien, security interest, or encumbrance, except the security interest granted
hereby and for taxes not yet due.
(f) The Debtor will pay to the Secured Party all costs and
expenses, including reasonable attorney's fees, incurred or paid by the Secured
Party in exercising or protecting its interests, rights and remedies under this
Agreement in the event of default by the Debtor hereunder or under the Stock
Purchase Agreement or the Obligations.
(g) The Debtor will pay all expenses incurred by the Secured Party
in preserving, defending, and enforcing this security interest in the Collateral
and in collecting or enforcing the Obligations. Expenses for which the Debtor
is liable include, but are not limited to, taxes, assessments, reasonable
attorney's fees, and other legal expenses. These expenses will bear interest
from the dates of payment at the highest rate stated in the Obligations, and the
Debtor will pay the Secured Party this interest on demand at a time and place
reasonably specified by the Secured Party. These expenses and interest will be
part of the Obligations and will be recoverable as such in all respects.
(h) The Debtor will immediately notify the Secured Party of any
change in the Debtor's name, address, or location, change in any matter
warranted or represented in this Agreement, change that may affect this security
interest, and any Event of Default.
(i) The Debtor appoints the Secured Party as the Debtor's
attorney-in-fact, effective if an Event of Default as hereinafter defined is not
cured within 30 days after receipt by the Debtor from the Secured Party of
notice thereof, to do any act that the Debtor is obligated to do by this
Agreement, to exercise all rights of the Debtor in the Collateral, to make all
collections, to execute any papers and instruments, and to do all other things
necessary to preserve and protect the Collateral and to make collections and to
protect the Secured Party's security interest in the Collateral.
(j) If during the term of this pledge, any subscription, option,
warrant or other right is issued in connection with the Collateral, or any
dividend, distribution, split, reclassification, readjustment or other change is
declared or made in the capital structure or ownership interests of the Company,
all such rights and all new shares, securities, interests or other rights issued
pursuant thereto shall be held by the Secured Party under the terms hereof in
the same manner as the Collateral originally pledged hereunder and the Debtor
shall not exercise any such rights.
(k) During the term of this pledge, the Debtor shall prevent (i)
any issuance of capital stock by the Company that would dilute the ownership
interest in the Company represented by the Collateral; (ii) any dividend,
distribution or other payment from the Collateral by the Company; (iii) any
amendment or modification to
2
the Company's articles of incorporation, bylaws and other governing documents
that could adversely affect the value of the Collateral; (iv) any merger,
reorganization, consolidation, recapitalization, substantial asset sale,
liquidation, extraordinary action, filing of insolvency or bankruptcy
proceedings, or similar corporate action not in the ordinary course of business
by the Company; (v) any agreement or arrangement regarding compensation,
remuneration, employee, fringe or other benefits, expense reimbursement, or any
transfer of value, with an officer, director, or shareholder of the Company, or
any relative of any of the foregoing, or any person, business or entity
affiliated with any of the foregoing, other than on terms and conditions that
are intrinsically fair and reasonable and substantially similar to those that
would be available on an arms-length basis with third parties and which are
terminable with not more than 30 days notice by the Company; (vi) any lease,
license, sale or other agreement relating to any Company patent, trademark,
copyright, know-how, technology, intellectual property, or other proprietary
right, without the prior written consent of the Secured Party; and (vii) any
action which is likely to cause the value of the Collateral to materially
decline.
3. General Covenants. The security interest granted hereby shall in no
-----------------
way be affected by any indulgence or indulgences, extension or extensions,
change or changes in the form, evidence, maturity, rate of interest or otherwise
of the Obligations, or by want of presentment, notice, protest, suit, or
indulgence upon the Obligations, or shall any release of any security for any of
the parties liable for the payment of the Obligations in any manner affect or
impair this Agreement, and same shall continue in full force and effect in
accordance with their terms until the Obligations have been fully paid.
Any and all securities and other properties of the Debtor heretofore, now
or hereafter delivered to the Secured Party, or in the Secured Party's
possession, shall also secure the Obligations and shall be held and construed to
be a part of the Collateral hereunder to the same extent as fully described
herein.
4. Events of Default. The Debtor shall be in default under this
-------------------
Agreement upon the happening of any of the following events or conditions
(hereinafter severally referred to as an "Event of Default" and collectively
referred to as the "Events of Default"):
(a) Default by the Debtor with respect to any of the Obligations
which is not cured within 30 days.
(b) The levy of any attachment, execution or other process against
the Debtor, the Company, or any of the Collateral that is not stayed or
dismissed within 30 days.
(c) Dissolution, termination of existence, insolvency or business
failure of the Debtor, the Company, or any endorser, guarantor or surety of the
Obligations, or commission of the act of bankruptcy by, or the appointment of a
receiver or other legal representative for any part of the property of,
assignment for the benefit of creditors by, or commencement of any proceedings
under any bankruptcy or insolvency law by or against, the Debtor, the Company or
any endorser, guarantor, or surety for the Obligations that are not stayed or
dismissed within 30 days of filing.
(d) Default in the performance of any covenant or agreement of the
Debtor or the Company to the Secured Party, whether under this Agreement or the
Note, or any other instrument executed in connection with said agreements or
otherwise.
(e) The occurrence of any event which under the terms of any
evidence of indebtedness, indenture, loan agreement, security agreement, or
similar instrument permits the acceleration of maturity of any indebtedness of
the Company or the Debtor to the Secured Party, or to persons other than the
Secured Party, or the Secured Party receives notification that another person
has or expects to acquire a security interest in the Collateral or any part
thereof.
(f) If any warranty, covenant, or representation made to the
Secured Party by or on behalf of the Debtor or the Company proves to have been
false in any material respect when made.
(g) If any lien attaches to any of the Collateral.
3
5. Remedies. Upon the failure of the Debtor or the Company to cure an
--------
Event of Default within 30 days after receipt of notice from the Secured Party
of such Event of Default and at any time thereafter, at the option of the holder
thereof, any or all of the Obligations shall become immediately due and payable
without presentment or demand or any further notice to the Debtor, the Company,
or any other person obligated thereon, and the Secured Party shall have and may
exercise with reference to the Collateral any and all of the rights and remedies
of a secured party under the Uniform Commercial Code as adopted in the State of
Florida, and as otherwise granted herein or under any other agreement executed
by the Debtor, including, without limitation, the right and power to sell at
public or private sale or sales, or otherwise dispose of or utilize the
Collateral and any part or parts thereof in any manner authorized or permitted
under this Agreement or under the Uniform Commercial Code as adopted in the
State of Florida after default by the Debtor or the Company and to apply the
proceeds thereof toward the payment of any costs and expenses and attorney's
fees thereby incurred by the Secured Party and toward payment of the
Obligations, in such order or manner as the Secured Party may elect, including,
without limiting the foregoing:
(a) The Secured Party is hereby granted the right, at his option,
upon the occurrence of an Event of Default hereunder, to transfer at any time to
himself or to his nominee securities or other property hereby pledged, or any
part thereof, and to continue to exercise or thereafter exercise all voting
rights with respect to such security so transferred and to receive the proceeds,
payments, monies, income or benefits attributable or accruing thereto and to
hold the same as security for the Obligations hereby secured or at the Secured
Party's election, to apply such amounts to the Obligations, whether or not then
due, in such order as the Secured Party may elect, or, the Secured Party may, at
his option, without transferring such securities or properties to his nominee,
exercise all voting rights with respect to the securities pledged hereunder and
vote all or any part of such securities at any regular or special meeting of the
stockholders of the Company, and the Debtor does hereby name, constitute and
appoint as a proxy of the Debtor the Secured Party, in the Debtor's name, place
and stead to vote any and all such securities, as said proxy may elect for and
in the name, place and stead of the Debtor, such proxy to be irrevocable and
deemed coupled with an interest.
(b) Sell, lease, or otherwise dispose of any of the Collateral in
accordance with the rights, remedies, and duties of a secured party under
Chapters 2 and 9 of the Florida Uniform Commercial Code after giving notice as
required by those chapters; unless the Collateral threatens to decline speedily
in value, is perishable, or would typically be sold on a recognized market. The
Secured Party will give the Debtor reasonable notice of any public sale of the
Collateral or of a time after which it may be otherwise disposed of without
further notice of the Debtor. In such event, notice will be deemed reasonable
if it is mailed, postage prepaid, to the Debtor at the address specified in this
Agreement at least 30 days before any public sale or 30 days before the time
when the Collateral may be otherwise disposed of without further notice to the
Debtor.
(c) Apply any proceeds from disposition of the Collateral after
default in the manner specified in Chapter 9 of the Florida Uniform Commercial
Code, including payment of the Secured Party's reasonable attorney's fees and
court expenses.
(d) If, after disposition of the Collateral, the Obligations
remain unsatisfied, collect the deficiency from the Debtor.
(e) Retain all payments to date under the Stock Purchase Agreement
and cause the transfer of the Collateral into the name of Secured Party as
liquidated damages under the Note, and bring an action against Debtor in its
name or in the name of Company to the extent of any damage or loss in value to
the Collateral caused by the Debtor.
6. Voting Rights. So long as no Event of Default has occurred and
--------------
remains uncured and disregarding cure or grace periods under the Stock Purchase
Agreement or the Obligations, or hereunder, the Debtor shall have the right to
vote all of the Debtor's shares of the Sartam Stock or items of the Collateral
subject to this Agreement, and the Secured Party shall on demand execute and
deliver an effective proxy or proxies in favor of the Debtor, whenever demand is
made upon the Secured Party for such proxy or proxies by the Debtor. In the
event of an Event of Default which remains uncured disregarding cure or grace
periods under the Stock Purchase Agreement, the Obligations or hereunder, the
Secured Party shall have the right to vote all shares of the Sartam Stock or
items of the Collateral, and the Debtor hereby grants the Secured Party an
irrevocable proxy coupled with an interest to so vote the Collateral.
4
7. Payment of the Obligations. Simultaneously with the payment in full
--------------------------
of the Obligations, or the Obligations are otherwise deemed to have been paid in
full pursuant to the terms of the Stock Purchase Agreement and the Obligations,
the Secured Party shall execute and file at its own expense any and all
instruments necessary to terminate the security interest in the Collateral
created by this Agreement and also execute any and all other instruments deemed
reasonably necessary by the Debtor to vest in the Debtor title in the Sartam
Stock and any other item constituting the Collateral, free from any claim by the
Secured Party.
8. No Usury. It is the intention of the parties hereto to comply with
---------
the usury laws of the State of Florida. Accordingly, it is agreed that
notwithstanding any provision to the contrary in this Agreement or in any of the
documents evidencing the Obligations or otherwise relating thereto, no such
provision shall require the payment or permit the collection of interest in
excess of the maximum permitted by law. If any excess of interest in such
respect is provided for, or shall be adjudicated to be so provided for, in this
Agreement, or any of the documents evidencing the Obligations or otherwise
relating thereto, then in such event:
(a) The provisions of this paragraph shall govern and control;
(b) Neither the Debtor, the Company nor their successors or
assigns, or any other party liable for the payment of the Obligations, shall be
obligated to pay the amount of such interest to the extent that it is in excess
of the maximum amount permitted by law;
(c) Any such excess interest which may have been collected shall
be, at the option of the holder of the instrument evidencing the Obligations,
either applied as a credit against the unpaid principal amount thereof or
refunded to the maker thereof; and
(d) The effective rate of interest shall be automatically subject
to reduction to the maximum lawful contract rate allowed under the usury laws of
the State of Florida as now or hereafter construed by any court of competent
jurisdiction.
9. Assignment. Notwithstanding anything herein contained to the
----------
contrary, if the Debtor is not in default hereunder or under the Stock Purchase
Agreement or the Obligations, the Debtor may assign to ZANN Corp., a Nevada
corporation, all of his right, title, and interest in and to the Sartam Stock.
In the event of any such assignment, the Debtor shall be relieved of any and all
liability with respect to this Agreement, the Stock Purchase Agreement, the
Obligations, or any other instrument or obligation in connection therewith. Any
such assignment shall provide that ZANN Corp. shall be fully substituted for the
Debtor with respect to this Agreement, the Stock Purchase Agreement, the
Obligations, or any other instrument or obligation in connection therewith.
10. Mediation and Arbitration. All disputes arising or related to this
-------------------------
Agreement must exclusively be resolved first by mediation with a mediator
selected by the parties, with such mediation to be held in Sarasota, Florida.
If such mediation fails, then any such dispute shall be resolved by binding
arbitration under the Commercial Arbitration Rules of the American Arbitration
Association in effect at the time the arbitration proceeding commences, except
that (a) Florida law and the Federal Arbitration Act must govern construction
and effect, (b) the locale of any arbitration must be in Sarasota, Florida, and
(c) the arbitrator must with the award provide written findings of fact and
conclusions of law. Any party may seek from a court of competent jurisdiction
any provisional remedy that may be necessary to protect its rights or assets
pending the selection of the arbitrator or the arbitrator's determination of the
merits of the controversy. The exercise of such arbitration rights by any party
will not preclude the exercise of any self-help remedies (including without
limitation, setoff rights) or the exercise of any non-judicial foreclosure
rights. An arbitration award may be entered in any court having jurisdiction.
11. Attorney's Fees. In the event that it should become necessary for
----------------
any party entitled hereunder to bring suit against the other party to this
Agreement for enforcement of this Agreement, the parties hereby covenant and
agree that the party who is found to be the prevailing party in such suit shall
also be entitled to recover all of its reasonable attorney's fees and costs of
court incurred to bring suit from the other party.
5
12. Benefit. All the terms and provisions of this Agreement shall be
-------
binding upon and inure to the benefit of and be enforceable by the parties
hereto, and their respective heirs, executors, administrators, personal
representatives, successors and permitted assigns.
13. Notices. All notices, requests, demands, and other communications
-------
hereunder shall be in writing and delivered personally or sent by registered or
certified United States mail, return receipt requested with postage prepaid, or
by telecopy or e-mail, if to the Debtor, addressed to ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ at
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇-▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, telecopier (810)
629-9062, and e-mail ▇▇▇@▇▇▇▇▇▇▇▇.▇▇▇, with a copy to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, telecopier (713)
237-3202, and e-mail ▇▇▇▇▇▇▇▇▇@▇▇▇-▇▇▇.▇▇▇; and if to the Secured Party,
addressed to Mr. ▇▇▇▇▇▇▇ ▇▇▇▇ at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇, telecopier (▇▇▇) ▇▇▇-▇▇▇▇, and e-mail ▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇.▇▇▇, and ▇▇.
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, and
e-mail ▇▇▇▇▇▇▇▇▇@▇▇▇.▇▇▇, with a copy to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq. at ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, telecopier (▇▇▇) ▇▇▇-▇▇▇▇, and
e-mail ▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇. Any party hereto may change its address
upon 10 days' written notice to any other party hereto.
14. Construction. Words of any gender used in this Agreement shall be
------------
held and construed to include any other gender, and words in the singular number
shall be held to include the plural, and vice versa, unless the context requires
otherwise. In addition, the pronouns used in this Agreement shall be understood
and construed to apply whether the party referred to is an individual,
partnership, joint venture, corporation or an individual or individuals doing
business under a firm or trade name, and the masculine, feminine and neuter
pronouns shall each include the other and may be used interchangeably with the
same meaning.
15. Waiver. No course of dealing on the part of any party hereto or
------
its agents, or any failure or delay by any such party with respect to exercising
any right, power or privilege of such party under this Agreement or any
instrument referred to herein shall operate as a waiver thereof, and any single
or partial exercise of any such right, power or privilege shall not preclude any
later exercise thereof or any exercise of any other right, power or privilege
hereunder or thereunder.
16. Cumulative Rights. The rights and remedies of any party under this
-----------------
Agreement and the instruments executed or to be executed in connection herewith,
or any of them, shall be cumulative and the exercise or partial exercise of any
such right or remedy shall not preclude the exercise of any other right or
remedy.
17. Invalidity. In the event any one or more of the provisions
----------
contained in this Agreement or in any instrument referred to herein or executed
in connection herewith shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality, or unenforceability
shall not affect the other provisions of this Agreement or any such other
instrument.
18. Time of the Essence. Time is of the essence of this Agreement.
----------------------
19. Perfection of Title. The parties hereto shall do all other acts
---------------------
and things that may be reasonably necessary or proper, fully or more fully, to
evidence, complete or perfect this Agreement, and to carry out the intent of
this Agreement.
20. Headings. The headings used in this Agreement are for convenience
--------
and reference only and in no way define, limit, simplify or describe the scope
or intent of this Agreement, and in no way effect or constitute a part of this
Agreement.
21. Excusable Delay. None of the parties hereto shall be obligated to
----------------
perform and none shall be deemed to be in default hereunder, if the performance
of a non-monetary obligation is prevented by the occurrence of any of the
following, other than as the result of the financial inability of the party
obligated to perform: acts of God, strikes, lock-outs, other material industrial
disturbances, acts of a public enemy, terrorists, wars or war-like action
(whether actual, impending or expected and whether de jure or de facto), arrest
or other restraint of governmental (civil or military) blockades, insurrections,
riots, epidemics, landslides, lightning, earthquakes, fires, hurricanes, storms,
floods, washouts, sink holes, civil disturbances, explosions, breakage or
accident to equipment or
6
machinery, confiscation or seizure by any government of public authority,
nuclear reaction or radiation, radioactive contamination or other similar
causes, whether of the kind herein enumerated, or otherwise, that are not
reasonably within the control of the party claiming the right to delay
performance on account of such occurrence.
22. Incorporation by Reference. The agreements referred to or included
--------------------------
herein constitute integral parts to this Agreement and are incorporated into
this Agreement by this reference.
23. Multiple Counterparts. This Agreement may be executed in one or
----------------------
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. A facsimile transmission
of this signed Agreement shall be legal and binding on all parties hereto.
24. Controlling Agreement. In the event of any conflict between the
----------------------
terms of this Agreement, the Note, the Escrow Agreement, the Consulting
Agreements, or the Stock Purchase Agreement, the terms of the Stock Purchase
Agreement shall control. Provided, however, the time for curing a default with
respect to the Note as specified in the Note shall control over the terms of
this Agreement.
25. Law Governing; Jurisdiction. This Agreement shall be governed by
-----------------------------
and construed in accordance with the laws of the State of Florida, without
regard to any conflicts of laws provisions thereof. Each party hereby
irrevocably submits to the personal jurisdiction of the United States District
Court for the Middle District of Florida, as well as of the Courts of the State
of Florida in Sarasota County, Florida, exclusively over any suit, action or
proceeding arising out of or relating to this Agreement. Each party hereby
irrevocably waives, to the fullest extent permitted by law, any objection which
it may now or hereafter have to the laying of the venue of any such mediation,
arbitration, suit, action or proceeding brought in any such county and any claim
that any such mediation, arbitration, suit, action or proceeding brought in such
county has been brought in an inconvenient forum.
26. Entire Agreement. This instrument and the attachments hereto
-----------------
contain the entire understanding of the parties and may not be changed orally,
but only by an instrument in writing signed by the party against whom
enforcement of any waiver, change, modification, extension, or discharge is
sought.
IN WITNESS WHEREOF, the parties have executed this Agreement on the date
first written above.
THE SECURED PARTY:
----------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇
----------------------------------------
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
THE DEBTOR:
----------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
7
ATTACHMENT C
ESCROW AGREEMENT
THIS ESCROW AGREEMENT is made and entered into on June 27, 2005 by and
between ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, or ▇▇▇▇ Corp., a Nevada corporation, as his nominee
(the "Purchaser") and ▇▇▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ (collectively, the
"Sellers"), the controlling stockholders of SARTAM INDUSTRIES, INC., a Florida
corporation ("Sartam") and BURGESS, HARRELL, ▇▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇, P.A. (the
"Escrow Agent").
WHEREAS, the Purchaser and the Sellers have executed that certain Stock
Purchase Agreement (the "Stock Purchase Agreement") with respect to the purchase
of 1,795,250 shares of the issued and outstanding common stock, par value $0.01
per share, and 164,601 shares of the issued and outstanding convertible
preferred stock, second series, par value $0.01 per share (collectively, the
"Sartam Stock") of SARTAM INDUSTRIES, INC., a Florida corporation ("Sartam"), to
which Stock Purchase Agreement reference is hereby made; and
WHEREAS, all capitalized terms herein shall have the same meanings as
defined in the Stock Purchase Agreement, unless otherwise defined herein; and
WHEREAS, the Purchaser has delivered into escrow with the Escrow Agent the
1,795,250 common shares and 164,601 preferred shares of the Sartam Stock (the
"Escrowed Shares"); and
WHEREAS, the Escrowed Shares have been accompanied by stock powers duly
executed by the Purchaser in favor of the Sellers, which will be utilized to
transfer the Escrowed Shares to the Sellers in the event of a default under the
Stock Purchase Agreement or the Other Agreements;
NOW, THEREFORE, in consideration of the foregoing and the following mutual
covenants and agreements, the parties hereto do agree as follows:
1. Transfer into Escrow by the Purchaser. The Purchaser has delivered
--------------------------------------
into escrow with the Escrow Agent, the receipt of which is hereby acknowledged
by the Escrow Agent, the Escrowed Shares.
2. Release of the Escrowed Shares. Upon the complete satisfaction of
--------------------------------
the Stock Purchase Agreement and the Other Agreements, the Escrow Agent shall
deliver the Escrowed Shares to the Purchaser.
3. Duty of the Escrow Agent. The sole duty of the Escrow Agent, other
-------------------------
than as hereinafter specified, shall be to receive the Escrowed Shares and hold
them subject to release, in accordance with this Agreement, the Stock Purchase
Agreement, and the Other Agreements.
4. Liability of the Escrow Agent. The duties of the Escrow Agent
---------------------------------
hereunder will be limited to observance of the express provisions of this
Agreement. Furthermore, the Escrow Agent is not expected or required to be
familiar with the provisions of any other writing, understanding or agreement,
and shall not be charged with any responsibility or liability in connection with
the observance or non-observance of the provisions of such other writing,
understanding or agreement, and no implied covenant of any type whatsoever shall
be read into this Agreement.
The further provisions shall govern the Escrow Agent's liabilities
hereunder:
(a) In receiving the Escrowed Shares, the Escrow Agent acts only
as a depository and thereby assumes no responsibility, except pursuant to the
terms of this Agreement.
(b) The Escrow Agent may act or refrain from acting in respect of
any matter covered by this Agreement in full reliance upon and with the advice
of counsel which may be selected by him, and shall be fully protected in so
acting or in refraining from acting upon the advice of such counsel.
Furthermore, the Escrow Agent may rely and shall be protected in acting upon any
writing that may be submitted to him in connection with his duties hereunder
without determining the genuineness, authenticity or due authority from any such
writing or the person signing same and shall have no liability or responsibility
with respect to the form, content or validity thereof.
1
(c) The Escrow Agent shall have no responsibility or liability for
any act or omission on his part, notwithstanding any demand or notice to the
contrary by the Sellers or the Purchaser, or any other person or entity, all
subject to the sole limitation that the Escrow Agent exercises his best
judgment. Except as herein expressly provided, none of the provisions of this
Agreement shall require the Escrow Agent to expend or risk his own funds or
otherwise incur financial liability or expense in the performance of any of his
duties hereunder.
(d) The Escrow Agent is hereby authorized to comply with and obey
all orders, judgments, decrees or writs entered or issued by any court, and in
the event the Escrow Agent obeys or complies with any such order, judgment,
decree or writ, in whole or in part, he shall not be liable to the Sellers, the
Purchaser, or any other person or entity, by reason or such compliance,
notwithstanding that it shall be determined that any such order, judgment,
decree or writ be entered without jurisdiction or be invalid for any reason or
be subsequently reversed, modified, annulled, satisfied or vacated.
(e) The Escrow Agent shall not be required to institute or defend
any action or legal process involving any matter referred to herein which in any
manner affects his duties or liabilities hereunder to take any other action with
reference to the Escrowed Shares not specifically agreed to herein, and the
Escrow Agent shall not be responsible for any act or failure to act on his part
except in the case of his own fraud or gross negligence.
(f) Should any controversy arise between the Escrow Agent, the
Sellers, the Purchaser, or between any other person or entity with respect to
this Agreement, or with respect to the ownership of or the right to receive the
Escrowed Shares, the Escrow Agent shall have the right to institute a plea of
interpleader in any court of competent jurisdiction to determine the rights of
the parties. Should a plea of interpleader be instituted, or should the Escrow
Agent become involved in litigation in any manner whatsoever connected with or
pertaining to this Agreement, the Stock Purchase Agreement, the Other
Agreements, or the Escrowed Shares, the Sellers and the Purchaser hereby agree
to pay the Escrow Agent, on demand, in addition to any charge made hereunder for
acting as escrow agent, reasonable attorneys' fees incurred by the Escrow Agent,
and any other disbursements, expenses, losses, costs, and damages in connection
with or resulting from such litigation.
5. Indemnification. The Sellers and the Purchaser hereby agree to
---------------
indemnify and hold the Escrow Agent harmless from and against any and all
claims, loses, liabilities, costs, damages, fees, charges, and expenses
(including attorneys' fees) which the Escrow Agent may incur or sustain by
reason of his acting as the Escrow Agent under this Agreement, unless same shall
result from the fraud or gross negligence of the Escrow Agent. This shall
include customary fees and costs which the Escrow Agent charges as an attorney.
The parties waive the Escrow Agent's conflict in acting hereunder and
representing the Sellers.
6. Death, Incapacity, or Resignation of the Escrow Agent. In the event
-----------------------------------------------------
of the death, incapacity, or resignation of the Escrow Agent, the Sellers and
the Purchaser shall appoint a successor Escrow Agent within 10 days following
such death, incapacity, or resignation. If the Sellers and the Purchaser shall
fail to appoint a successor Escrow Agent within such 10 day period, the Sellers
or the Escrow Agent may thereupon deposit the Escrowed Shares and stock powers
into the registry of a court of competent jurisdiction, and seek to have a
successor Escrow Agent appointed by such court. Any substitute Escrow Agent
appointed hereunder shall possess and exercise all powers and authority herein
conferred on the original Escrow Agent, unless the court otherwise decrees in
the order of appointment. Further, any successor Escrow Agent shall receive
such compensation as such court may determine. The parties hereto intend that a
substitute Escrow Agent will be appointed to fulfill the duties of the Escrow
Agent hereunder for the remaining term of this Agreement in the event of the
Escrow Agent's death, incapacity, or resignation, and the Sellers will use his
best efforts to promptly appoint a substitute Escrow Agent who shall be bound by
the terms and provisions of this Agreement.
7. Termination and Amendment. This Agreement shall remain in effect
---------------------------
until the Escrowed Shares are delivered in accordance herewith; provided that
any escrow agent hereunder who resigns in accordance with the terms hereof shall
no longer be bound by this Agreement, but this Agreement shall remain in effect,
notwithstanding such resignation, for purposes of determining the rights and
duties of the Sellers and any successor escrow agent. No amendment or
modification to this Agreement shall be in force or effect unless signed by the
parties hereto.
2
8. No Trusteeship. The Sellers and the Purchaser agree that the Escrow
--------------
Agent is acting solely as an escrowee hereunder and not as a trustee and that
the Escrow Agent has no fiduciary duties, obligations or liabilities under this
Agreement.
9. Confidentiality. Except as required by applicable law, legal
---------------
process or other legal compulsion, the Escrow Agent shall hold all information
relating to the transactions contemplated by this Agreement in strict confidence
and under no circumstance shall any of the terms and conditions or the
participants involved be disclosed, unless such disclosure is mandated by
applicable law.
10. Assignment. Notwithstanding anything herein contained to the
----------
contrary, if the Purchaser is not in default hereunder, the Stock Purchase
Agreement or the Other Agreements, the Purchaser may assign to ZANN Corp., a
Nevada corporation, all of his right, title, and interest in and to the Sartam
Stock. In the event of any such assignment, the Purchaser shall be relieved of
any and all liability with respect to this Agreement, the Stock Purchase
Agreement or the Other Agreements, or any other instrument or obligation in
connection therewith. Any such assignment shall provide that ZANN Corp. shall
be fully substituted for the Purchaser with respect to this Agreement, the Stock
Purchase Agreement or the Other Agreements, or any other instrument or
obligation in connection therewith.
11. Mediation and Arbitration. All disputes arising or related to this
-------------------------
Agreement or the Other Agreements must exclusively be resolved first by
mediation with a mediator selected by the parties, with such mediation to be
held in Sarasota, Florida. If such mediation fails, then any such dispute shall
be resolved by binding arbitration under the Commercial Arbitration Rules of the
American Arbitration Association in effect at the time the arbitration
proceeding commences, except that (a) Florida law and the Federal Arbitration
Act must govern construction and effect, (b) the locale of any arbitration must
be in Sarasota, Florida, and (c) the arbitrator must with the award provide
written findings of fact and conclusions of law. Any party may seek from a
court of competent jurisdiction any provisional remedy that may be necessary to
protect its rights or assets pending the selection of the arbitrator or the
arbitrator's determination of the merits of the controversy. The exercise of
such arbitration rights by any party will not preclude the exercise of any
self-help remedies (including without limitation, setoff rights) or the exercise
of any non-judicial foreclosure rights. An arbitration award may be entered in
any court having jurisdiction.
12. Attorneys' Fees. In the event that it should become necessary for
----------------
any party entitled hereunder to bring suit against any other party for
enforcement of this Agreement, the parties hereby covenant and agree that the
party who is found to be the prevailing party in such suit shall also be
entitled to receive its reasonable attorneys' fees and costs of court from the
other parties.
13. Benefit. The terms and provisions of this Agreement shall be
-------
binding upon, inure to the benefit of and be enforceable by, the parties hereto
and their respective successors and permitted assigns.
14. Notices. All notices, requests, demands, and other communications
-------
hereunder shall be in writing and delivered personally or sent by registered or
certified United States mail, return receipt requested with postage prepaid, or
by telecopy or e-mail, if to the Purchaser, addressed to ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇-▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, telecopier
(▇▇▇) ▇▇▇-▇▇▇▇, and e-mail ▇▇▇@▇▇▇▇▇▇▇▇.▇▇▇, with a copy to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
Esq. at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, telecopier (713)
237-3202, and e-mail ▇▇▇▇▇▇▇▇▇@▇▇▇-▇▇▇.▇▇▇; and if to the Sellers, addressed to
Mr. ▇▇▇▇▇▇▇ ▇▇▇▇ at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, telecopier
(▇▇▇) ▇▇▇-▇▇▇▇, and e-mail ▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇.▇▇▇, and ▇▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, and e-mail
▇▇▇▇▇▇▇▇▇@▇▇▇.▇▇▇, with a copy to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq. at ▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, telecopier (▇▇▇) ▇▇▇-▇▇▇▇, and e-mail
▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇. Any party hereto may change its address upon 10
days' written notice to any other party hereto.
15. Construction. Words of any gender used in this Agreement shall be
------------
held and construed to include any other gender, and words in the singular number
shall be held to include the plural, and vice versa, unless the context requires
otherwise. In addition, the pronouns used in this Agreement shall be understood
and construed to apply whether the party referred to is an individual,
partnership, joint venture, corporation or an individual or
3
individuals doing business under a firm or trade name, and the masculine,
feminine and neuter pronouns shall each include the other and may be used
interchangeably with the same meaning.
16. Waiver. No course of dealing on the part of any party hereto or
------
its agents, or any failure or delay by any such party with respect to exercising
any right, power or privilege of such party under this Agreement or any
instrument referred to herein shall operate as a waiver thereof, and any single
or partial exercise of any such right, power or privilege shall not preclude any
later exercise thereof or any exercise of any other right, power or privilege
hereunder or thereunder.
17. Representations, Warranties and Agreements to Survive. All
----------------------------------------------------------
indemnity agreements set forth in this Agreement, as well as all
representations, warranties, covenants and other agreements set forth in this
Agreement shall remain operative and in full force and effect at the termination
of this Agreement, and any successor of the parties shall be entitled to the
benefit of the respective representations, warranties and agreements made
herein.
18. Cumulative Rights. The rights and remedies contained in this
------------------
Agreement shall be cumulative and the exercise or partial exercise of any such
right or remedy shall not preclude the exercise of any other right or remedy.
19. Invalidity. In the event any one or more of the provisions
----------
contained in this Agreement shall, for any reason, be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect the other provisions of this Agreement or any
such other instrument.
20. Headings. The headings used in this Agreement are for convenience
--------
and reference only and in no way define, limit, amplify or describe the scope or
intent of this Agreement, and do not effect or constitute a part of this
Agreement.
21. Excusable Delay. The parties shall not be obligated to perform and
---------------
shall not be deemed to be in default hereunder, if the performance of a
non-monetary obligation required hereunder is prevented by the occurrence of any
of the following, other than as the result of the financial inability of the
party obligated to perform: acts of God, strikes, lock-outs, other material
industrial disturbances, acts of a public enemy, war or war-like action (whether
actual, impending or expected and whether de jure or de facto), acts of
terrorists, arrest or other restraint of governmental (civil or military),
blockades, insurrections, riots, epidemics, landslides, lightning, earthquakes,
fires, hurricanes, storms, floods, washouts, sink holes, civil disturbances,
explosions, breakage or accident to equipment or machinery, confiscation or
seizure by any government of public authority, nuclear reaction or radiation,
radioactive contamination or other similar causes, whether of the kind herein
enumerated or otherwise, that are not reasonably within the control of the party
claiming the right to delay performance on account of such occurrence.
22. No Third-Party Beneficiary. Any agreement to pay an amount and any
--------------------------
assumption of liability contained in this Agreement, express or implied, shall
be only for the benefit of the undersigned parties and their respective
successors and assigns (as herein expressly permitted), and such agreements and
assumptions shall not inure to the benefit of the obligees or any other party,
whomsoever, it being the intention of the parties hereto that no one shall be or
be deemed to be a third-party beneficiary of this Agreement.
23. Law Governing; Jurisdiction. This Agreement shall be governed by
-----------------------------
and construed in accordance with the laws of the State of Florida, without
regard to any conflicts of laws provisions thereof. Each party hereby
irrevocably submits to the personal jurisdiction of the United States District
Court for the Middle District of Florida, as well as of the Courts of the State
of Florida in Sarasota County, Florida, exclusively over any suit, action or
proceeding arising out of or relating to this Agreement. Each party hereby
irrevocably waives, to the fullest extent permitted by law, any objection which
it may now or hereafter have to the laying of the venue of any such mediation,
arbitration, suit, action or proceeding brought in any such county and any claim
that any such mediation, arbitration, suit, action or proceeding brought in such
county has been brought in an inconvenient forum.
4
24. Incorporation by Reference. Any agreement referred to or included
---------------------------
herein constitutes an integral part to this Agreement and is incorporated into
this Agreement by this reference.
25. Controlling Agreement. In the event of any conflict between the
----------------------
terms of this Agreement, the Stock Purchase Agreement, or the Other Agreements,
the terms of the Stock Purchase Agreement shall control except that the Escrow
Agent's duties shall not exceed those specified herein.
26. Entire Agreement. This instrument contains the entire
-----------------
understanding of the parties with respect to the subject matter hereof, and may
not be changed orally, but only by an instrument in writing signed by each of
the parties hereto.
27. Multiple Counterparts. This Agreement may be executed in one or
----------------------
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. A facsimile transmission
of this signed Agreement shall be legal and binding on all parties hereto.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as of the day and year first above written.
------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇
------------------------------------------
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, HARRELL, MANCUSO, ▇▇▇▇▇ & COLTON,
P.A., a Florida professional association
By
----------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Vice President
5
ATTACHMENT D
STOCK POWERS
Assignment of Stock Separate From Stock Certificate
The undersigned does hereby assign and transfer to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 280,455
shares of the common stock .01 par value of Sartam Industries, Inc., a Florida
corporation (the "Company") standing in my name on the books and records of the
Company, represented by Certificate Number(s) 74, 130 and 131, and irrevocably
appoint the officers of the Company as my attorney-in-fact for the sole purpose
of transferring the shares of such stock on the books and records of the
Company. Except as otherwise appearing on the face of the certificate, I
represent and warrant that I am the sole and lawful owner of the shares of such
stock, and that they are all of the shares of such class that I own in the
Company. I bind myself, my heirs, and assigns to warrant and defend forever the
title to such shares to the transferee, his successors and assigns against any
lawful claims.
Dated: June 26, 2005.
-------
WITNESS:
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇ /s/ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------ ------------------------
Signature Signature
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Printed Name Printed Name
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇.
------------------------ ------------------------
Street ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇. ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
------------------------ ------------------------
City, State and Zip Code City, State and Zip Code
Assignment of Stock Separate From Stock Certificate
The undersigned does hereby assign and transfer to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 100,000
shares of the common stock .01 par value of Sartam Industries, Inc., a Florida
corporation (the "Company") standing in my name on the books and records of the
Company, represented by Certificate Number(s) 44, and irrevocably appoint the
officers of the Company as my attorney-in-fact for the sole purpose of
transferring the shares of such stock on the books and records of the Company.
Except as otherwise appearing on the face of the certificate, I represent and
warrant that I am the sole and lawful owner of the shares of such stock, and
that they are all of the shares of such class that I own in the Company. I bind
myself, my heirs, and assigns to warrant and defend forever the title to such
shares to the transferee, his successors and assigns against any lawful claims.
Dated: 6/27/ , 2005.
---------
WITNESS:
/s/ ▇▇▇▇▇ ▇▇▇▇
------------------------ ------------------------
Signature Signature
▇▇▇▇▇ ▇. ▇▇▇▇
Printed Name Printed Name
▇▇▇ ▇▇▇▇▇ ▇▇. ▇▇▇. ▇
------------------------ ------------------------
Street ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
------------------------ ------------------------
City, State and Zip Code City, State and Zip Code
Assignment of Stock Separate From Stock Certificate
The undersigned does hereby assign, and transfer to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 752,541
shares of the common stock .01 par value of Sartam Industries, Inc., a Florida
corporation (the "Company") standing in my name on the books and records of the
Company, represented by Certificate Number(s)40, 43, 44, 45, 136 and 137, and
irrevocably appoint the officers of the Company as my attorney-in-fact for the
sole purpose of transferring the shares of such stock on the books and records
of the Company. Except as otherwise appearing on the face of the certificate, I
represent and warrant that I am the sole and lawful owner of the shares of such
stock, and that they are all of the shares of such class that I own in the
Company. I bind myself, my heirs, and assigns to warrant and defend forever the
title to such shares to the transferee, his successors and assigns against any
lawful claims.
Dated: 6/27/ , 2005.
---------
WITNESS:
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
------------------------ ------------------------
Signature Signature
▇▇▇▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇ ▇. ▇▇▇▇
Printed Name Printed Name
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇.
------------------------ ------------------------
Street ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
------------------------ ------------------------
City, State and Zip Code City, State and Zip Code
Assignment of Stock Separate From Stock Certificate
The undersigned does hereby assign and transfer to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 10,000
shares of the preferred stock $1.00 par value of Sartam Industries, Inc., a
Florida corporation (the "Company") standing in my name on the books and records
of the Company, represented by Certificate Number(s) 290, and irrevocably
appoint the officers of the Company as my attorney-in-fact for the sole purpose
of transferring the shares of such stock on the books and records of the
Company. Except as otherwise appearing on the face of the certificate, I
represent and warrant that I am the sole and lawful owner of the shares of such
stock, and that they are all of the shares of such class that I own in the
Company. I bind myself, my heirs, and assigns to warrant and defend forever the
title to such shares to the transferee, his successors and assigns against any
lawful claims.
Dated: 6/24/ , 2005.
---------
WITNESS:
/s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------ ------------------------
Signature Signature
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Printed Name Printed Name
illegible illegible
------------------------ ------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
illegible illegible
------------------------ ------------------------
City, State and Zip Code City, State and Zip Code
Assignment of Stock Separate from Stock Certificate
The undersigned does hereby assign and transfer to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 129,134
shares of the preferred stock $ 1.00 par value of Sartam Industries, Inc., a
Florida corporation (the "Company") standing in my name on the books and records
of the Company, represented by Certificate Number(s) 201, 204 and 278, and
irrevocably appoint the officers of the Company as my attorney-in-fact for the
sole purpose of transferring the shares of such stock on the books and records
of the Company. Except as otherwise appearing cm the face of the certificate, I
represent and warrant that I am the sole and lawful owner of the shares of such
stock, and that they are all of the shares of such class that I own in the
Company. I bind myself, my heirs, and assigns to warrant and defend forever the
title to such shares to the transferee, his successors and assigns against any
lawful claims.
Dated: June 27, 2005.
--
WITNESS:
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
------------------------ ------------------------
Signature Signature
▇▇▇▇▇▇▇ J, ▇▇▇▇ ▇▇▇▇▇▇ ▇. ▇▇▇▇
Printed Name Printed Name
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇.
------------------------ ------------------------
Street ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
------------------------ ------------------------
City, State and Zip Code City, State and Zip Code
Assignment of Stock Separate From Stock Certificate
The undersigned does hereby assign and transfer to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 50,934
shares of the preferred stock $1.00 par value of Sartam Industries, Inc., a
Florida corporation (the "Company") standing in my name on the books and records
of the Company, represented by Certificate Number(s) 204 and 309(replacing lost
certificate 205), and irrevocably appoint the officers of the Company as my
attorney-in-fact for the sole purpose of transferring the Shares of such stock
on the books and records of the Company. Except as otherwise appearing on the
face of the certificate, I represent and warrant that I am the sole and lawful
owner of the shares of such stock, and that they are all of the shares of such
class that I own in the Company. I bind myself, my heirs, and assigns to warrant
and defend forever the title to such shares to the transferee, his successors
and assigns against any lawful claims.
Dated: June 27, 2005
--
WITNESS:
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇
------------------------ ------------------------
Signature Signature
▇▇▇▇▇▇▇ ▇ ▇▇▇▇
Printed Name Printed Name
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇.
------------------------ ------------------------
Street ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
------------------------ ------------------------
City, State and Zip Code City, State and Zip Code
Assignment of Stock Separate From Stock Certificate
The undersigned does hereby assign and transfer to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 168,731
shares of the common stock .01 par value of Sartam Industries, Inc., a Florida
corporation (the "Company") standing in my name on the books and records of the
Company, represented by Certificate Number(s) 43, 134 and 135, and irrevocably
appoint the officers of the Company as my attorney-in-fact for the sole purpose
of transferring the shares of such stock on the books and records of the
Company. Except as otherwise appearing on the face of the certificate, I
represent and warrant that I am the sole and lawful owner of the shares of such
stock, and that they are all of the shares of such class that I own in the
Company. I bind myself, my heirs, and assigns to warrant and defend forever the
title to such shares to the transferee, his successors and assigns against any
lawful claims.
Dated: 6/27 , 2005.
--------
WITNESS:
/s/ ▇▇▇▇ ▇▇▇▇
------------------------ ------------------------
Signature Signature
▇▇▇▇ ▇ ▇▇▇▇
Printed Name Printed Name
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇.
------------------------ ------------------------
Street ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
------------------------ ------------------------
City, State and Zip Cods City, State and Zip Code
Assignment of Stock Separate From Stock Certificate
The undersigned does hereby assign and transfer to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 693,523
shares of the common stock .01 par value of Sartam Industries, Inc., a Florida
corporation (the "Company") standing in my name on the books and records of the
Company, represented by Certificate Number(s) 39, 75, 132 and 133, and
irrevocably appoint the officers of the Company as my attorney-in-fact for the
sole purpose of transferring the shares of such stock on the books and records
of the Company. Except as otherwise appearing on the face of the certificate, I
represent and warrant that I am the sole and lawful owner of the shares of such
stock, and that they are all of the shares of such class that I own in the
Company. I bind myself, my heirs, and assigns to warrant and defend forever the
title to such shares to the transferee, his successors and assigns against any
lawful claims.
Dated: 6/24 , 2005
--------
WITNESS:
/s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------ ------------------------
Signature Signature
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Printed Name Printed Name
illegible illegible
------------------------ ------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
illegible illegible
------------------------ ------------------------
City, State and Zip Code City, State and Zip Code
ATTACHMENT E
CONSULTING AGREEMENTS
THIS AGREEMENT is made this 27th day of June, 2005 by and between ZANN
CORP., a Nevada corporation (the "Company") and ▇▇▇▇▇▇▇ ▇▇▇▇ (the "Consultant").
WHEREAS, pursuant to that certain Stock Purchase Agreement dated June 27,
2005 (the "Stock Purchase Agreement") the Consultant and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
have sold to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ or the Company, as his nominee, 1,795,250 shares
of the issued and outstanding common stock, par value $0.01 per share, and
164,601 shares of the issued and outstanding convertible preferred stock, second
series, par value $0.01 per share, in SARTAM INDUSTRIES, INC., a Florida
corporation (collectively, the "Sartam Stock"); and
WHEREAS, all capitalized terms herein shall have the same meanings as
defined in the Stock Purchase Agreement, unless otherwise defined herein;
WHEREAS, the Company wishes to obtain the advice, contacts and expert
judgment of the Consultant with respect to the conduct of the Company's
business; and
WHEREAS, the Company desires to have the Consultant act as an independent
contractor for the purpose of providing such services to the Company; and
WHEREAS, the Consultant is qualified and willing to provide such services
pursuant to the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. Services. The Company hereby engages and retains the Consultant as
--------
an independent contractor to provide the services set forth herein. The
Consultant hereby agrees to provide all reasonable and necessary services
associated with the following: (a) assisting in the development of a
comprehensive business plan; (b) assisting in future acquisition strategies; and
(c) any other ancillary services relating to the aforementioned (collectively,
the "Services"). The Services shall be performed in Sarasota County, Florida
unless agreed otherwise in writing between the parties. The Services shall be
performed on a part-time basis, which shall require no more than 50 hours per
month.
2. Fee. In full consideration of the Services provided hereunder, the
---
Company agrees to pay the Consultant the sum of $10,000 per month, beginning 30
days following the date hereof to be payable in cash. The $10,000 per month may
be paid with common stock of the Company, which common stock will be registered
at the Company's expense on Form S-8 promulgated under the Securities Act of
1933, as amended (the "S-8 Stock") having a value of at least $10,000 at the
time of issuance. It is understood that the S-8 Stock will be sold by the
Consultant and the proceeds thereof will be applied to the payment obligation
prescribed herein. If the proceeds from the sale of the S-8 Stock do not equal
at least $10,000 per month, the Company will issue additional shares of the S-8
Stock so that the Consultant will receive at least $10,000 each month from the
sale of the S-8 Stock. The Consultant agrees that any proceeds from the S-8
Stock will be applied to the $10,000 per month consulting fees. After this
Agreement has been fully performed, any overpayment held by the Consultant shall
be returned to the Company.
3. Representations and Warranties of the Consultant. The Consultant
---------------------------------------------------
hereby agrees to use his best efforts in providing the Services and loyally
represent the interests of the Company in accordance with the Company's
reasonable requirements and objectives. The Consultant and the Company
acknowledge that the Consultant is experienced in providing the Services and
will provide the Services with the diligence and care of others in the industry.
The Consultant further represents that he has not, and shall not, enter into any
agreement during the term of this Agreement which might prevent him from
performing his obligations hereunder. With respect to the shares of the S-8
Stock to be issued in payment for the Services rendered hereunder, the
Consultant represents and warrants as follows:
1
(a) The Consultant is a natural person;
(b) He has and will provide bona fide services to the Company not
related or connected to the resale of the shares of the S-8 Stock;
(c) The Services are not and will not be in connection with the
offer or sale of securities in a capital-raising transaction, and do not
directly or indirectly promote or maintain a market for the Company's
securities;
(d) By prearrangement or otherwise, the Company has not controlled
or directed the resale of the shares of the S-8 Stock in the public market;
(e) The Company or its affiliates will not directly or indirectly
receive a percentage of proceeds from any resales of the shares of the S-8 Stock
by the Consultant, or
(f) The proceeds from the resale of any such shares of the S-8
Stock will not be applied to pay expenses of the Company that are not related to
any service provided by the Consultant.
4. Expenses. All expenses, including travel and lodging, incurred by
--------
the Consultant in the performance of the Services shall be the sole
responsibility of the Consultant, unless otherwise agreed to in writing. During
the continuance of this Agreement, the Consultant shall certify as regular and
guarantee the Consultant's situation towards all relevant tax authorities,
social security administrations and professional organizations, if applicable,
as being in conformity with the Consultant's status as an independent
contractor.
5. Insurance. The parties agree that the Company shall not be required
---------
to carry insurance or in any way insure the activities of the Consultant, its
agents, servants or employees, nor shall the Company be liable for any of the
acts or omissions of the Consultant, its agents, servants or employees. The
Consultant further agrees to indemnify, defend, and hold harmless the Company
from any and all claims, penalties, fines, causes of action, liabilities, or
threats of such actions which arise out of the Consultant's breach of this
Agreement or the Consultant's negligent performance of the Services. This
provision shall survive the termination of this Agreement.
6. Duration. This Agreement shall remain in effect for a period of 14
--------
months commencing on the date hereof.
7. Confidentiality. All information relating to the business and
---------------
affairs of the Company shall be treated as Confidential Information, as
hereinafter defined, by the Consultant both during and after the term hereof.
Except with the prior approval of the Company, the Consultant shall not disclose
any of the Confidential Information at any time to any person except authorized
personnel of the Company and its affiliated corporations, and the Consultant's
counsel. The Consultant further agrees not to use any information made
available to or coming into his possession or knowledge in a manner that is
adverse to the business of the Company. All data, records and written material
prepared or compiled by the Consultant or furnished to the Consultant during the
term hereof shall be the sole and exclusive property of the Company, and none of
such data, records or written materials, or copies thereof, shall be retained by
the Consultant after the term of this Agreement.
As used herein, the term "Confidential Information" includes, without
limitation, information and knowledge pertaining to products, inventions,
innovations, designs, ideas, plans, trade secrets, proprietary information,
manufacturing, packaging, advertising, distribution and sales methods and
systems, sales and profit figures, customer and client lists, and relationships
between the Company and its affiliated corporations and dealers, distributors,
customers, clients, suppliers and others who have had or will have had business
dealings with the Company and its affiliated corporations. The term
"Confidential Information" does not include information which (a) becomes
generally available to the public through no wrongful act on the part of the
Consultant, (b) can be shown to have been previously available to the Consultant
on a non-confidential basis prior to its disclosure to the Consultant by the
Company, or its representatives, (c) becomes available to the Consultant on a
non-confidential basis from a source other than the Company or its
representatives, or (d) is required to be disclosed by order of a court of
competent jurisdiction.
2
Notwithstanding anything herein contained to contrary, the above described
obligation with respect to confidentiality shall survive any termination of the
Consultant's engagement hereunder or the termination of this Agreement.
8. Mediation and Arbitration. All disputes arising or related to this
--------------------------
Agreement must exclusively be resolved first by mediation with a mediator
selected by the parties, with such mediation to be held in Sarasota, Florida.
If such mediation fails, then any such dispute shall be resolved by binding
arbitration under the Commercial Arbitration Rules of the American Arbitration
Association in effect at the time the arbitration proceeding commences, except
that (a) Florida law and the Federal Arbitration Act must govern construction
and effect, (b) the locale of any arbitration must be in Sarasota, Florida, and
(c) the arbitrator must with the award provide written findings of fact and
conclusions of law. Any party may seek from a court of competent jurisdiction
any provisional remedy that may be necessary to protect its rights or assets
pending the selection of the arbitrator or the arbitrator's determination of the
merits of the controversy. The exercise of such arbitration rights by any party
will not preclude the exercise of any self-help remedies (including without
limitation, setoff rights) or the exercise of any non-judicial foreclosure
rights. An arbitration award may be entered in any court having jurisdiction.
9. Attorneys' Fees. In the event that it should become necessary for
----------------
any party entitled hereunder to bring suit against any other party for
enforcement of this Agreement, the parties hereby covenant and agree that the
party who is found to be the prevailing party shall also be entitled to recover
its reasonable attorneys' fees and costs of court incurred from the other
parties.
10. Benefit. The terms and provisions of this Agreement shall be
-------
binding upon, inure to the benefit of and be enforceable by, the parties hereto
and their respective successors and permitted assigns.
11. Relationship of Parties. The Consultant is providing services on
-------------------------
an independent contractor basis. Notwithstanding anything to the contrary
herein, this Agreement shall not in any manner be construed to create a joint
venture, partnership, agency or other similar form of relationship, and neither
party shall have the right or authority to: (a) commit the other party to any
obligation or transaction not expressly authorized by such other party, or (b)
act or purport to act as agent or representative of the other, except as
expressly authorized in writing by such other party. Further, the Consultant
shall not be deemed to be an employee of the Company for any reason. The
Company and the Consultant acknowledge that the Consultant shall not be entitled
to any insurance, pension, profit sharing, retirement or other fringe benefits
which the Company may provide to its employees during the term of this
Agreement.
12. Notices. All notices, requests, demands, and other communications
-------
hereunder shall be in writing and delivered personally or sent by registered or
certified United States mail, return receipt requested with postage prepaid, or
by telecopy or e-mail, if to the Company, addressed to ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ at
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇-▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, telecopier (810)
629-9062, and e-mail ▇▇▇@▇▇▇▇▇▇▇▇.▇▇▇, with a copy to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, telecopier (713)
237-3202, and e-mail ▇▇▇▇▇▇▇▇▇@▇▇▇-▇▇▇.▇▇▇; and if to the Consultant, addressed
to Mr. ▇▇▇▇▇▇▇ ▇▇▇▇ at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇,
telecopier (▇▇▇) ▇▇▇-▇▇▇▇, and e-mail ▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇.▇▇▇, with a copy to
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq. at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇,
telecopier (▇▇▇) ▇▇▇-▇▇▇▇, and e-mail ▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇. Any party
hereto may change its address upon 10 days' written notice to any other party
hereto.
13. Construction. Words of any gender used in this Agreement shall be
------------
held and construed to include any other gender, and words in the singular number
shall be held to include the plural, and vice versa, unless the context requires
otherwise. In addition, the pronouns used in this Agreement shall be understood
and construed to apply whether the party referred to is an individual,
partnership, joint venture, corporation or an individual or individuals doing
business under a firm or trade name, and the masculine, feminine and neuter
pronouns shall each include the other and may be used interchangeably with the
same meaning.
14. Waiver. No course of dealing on the part of any party hereto or
------
its agents, or any failure or delay by any such party with respect to exercising
any right, power or privilege of such party under this Agreement or any
instrument referred to herein shall operate as a waiver thereof, and any single
or partial exercise of any such right,
3
power or privilege shall not preclude any later exercise thereof or any exercise
of any other right, power or privilege hereunder or thereunder.
15. Cumulative Rights. The rights and remedies contained in this
------------------
Agreement shall be cumulative and the exercise or partial exercise of any such
right or remedy shall not preclude the exercise of any other right or remedy.
16. Invalidity. In the event any one or more of the provisions
----------
contained in this Agreement shall, for any reason, be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect the other provisions of this Agreement or any
such other instrument.
17. Headings. The headings used in this Agreement are for convenience
--------
and reference only and in no way define, limit, amplify or describe the scope or
intent of this Agreement, and do not effect or constitute a part of this
Agreement.
18. Excusable Delay. The parties shall not be obligated to perform and
---------------
shall not be deemed to be in default hereunder, if the performance of a
non-monetary obligation required hereunder is prevented by the occurrence of any
of the following, other than as the result of the financial inability of the
party obligated to perform: acts of God, strikes, lock-outs, other industrial
disturbances, acts of a public enemy, war or war-like action (whether actual,
impending or expected and whether de jure or de facto), acts of terrorists,
arrest or other restraint of governmental (civil or military), blockades,
insurrections, riots, epidemics, landslides, lightning, earthquakes, fires,
hurricanes, storms, floods, washouts, sink holes, civil disturbances,
explosions, breakage or accident to equipment or machinery, confiscation or
seizure by any government of public authority, nuclear reaction or radiation,
radioactive contamination or other causes, whether of the kind herein enumerated
or otherwise, that are not reasonably within the control of the party claiming
the right to delay performance on account of such occurrence.
19. No Third-Party Beneficiary. Any agreement to pay an amount and any
--------------------------
assumption of liability contained in this Agreement, express or implied, shall
be only for the benefit of the undersigned parties and their respective
successors and assigns (as herein expressly permitted), and such agreements and
assumptions shall not inure to the benefit of the obligees or any other party,
whomsoever, it being the intention of the parties hereto that no one shall be or
be deemed to be a third-party beneficiary of this Agreement.
20. Law Governing; Jurisdiction. This Agreement shall be governed by
-----------------------------
and construed in accordance with the laws of the State of Florida, without
regard to any conflicts of laws provisions thereof. Each party hereby
irrevocably submits to the personal jurisdiction of the United States District
Court for the Middle District of Florida, as well as of the Courts of the State
of Florida in Sarasota County, Florida, exclusively over any suit, action or
proceeding arising out of or relating to this Agreement. Each party hereby
irrevocably waives, to the fullest extent permitted by law, any objection which
it may now or hereafter have to the laying of the venue of any such mediation,
arbitration, suit, action or proceeding brought in any such county and any claim
that any such mediation, arbitration, suit, action or proceeding brought in such
county has been brought in an inconvenient forum.
21. Incorporation by Reference. The agreements referred to or included
--------------------------
herein constitute integral parts to this Agreement and are incorporated into
this Agreement by this reference.
22. Multiple Counterparts. This Agreement may be executed in one or
----------------------
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. A facsimile transmission
of this signed Agreement shall be legal and binding on all parties hereto.
23. Controlling Agreement. In the event of any conflict between the
----------------------
terms of this Agreement, the Note, the Escrow Agreement, the Consulting
Agreements, or the Stock Purchase Agreement, the terms of the Stock Purchase
Agreement shall control.
24. Entire Agreement. This instrument contains the entire
-----------------
understanding of the parties with respect to the subject matter hereof, and may
not be changed orally, but only by an instrument in writing signed by each of
the parties hereto.
4
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as of the day and year first above written.
ZANN CORP.
By
--------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
----------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇
5
CONSULTING AGREEMENT
THIS AGREEMENT is made this 27th day of June, 2005 by and between ZANN
CORP., a Nevada corporation (the "Company") and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ (the
"Consultant").
WHEREAS, pursuant to that certain Stock Purchase Agreement dated June 27,
2005 (the "Stock Purchase Agreement") the Consultant and ▇▇▇▇▇▇▇ ▇▇▇▇ have sold
to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ or the Company, as his nominee, 1,795,250 shares of the
issued and outstanding common stock, par value $0.01 per share, and 164,601
shares of the issued and outstanding convertible preferred stock, second series,
par value $0.01 per share, in SARTAM INDUSTRIES, INC., a Florida corporation
(collectively, the "Sartam Stock"); and
WHEREAS, all capitalized terms herein shall have the same meanings as
defined in the Stock Purchase Agreement, unless otherwise defined herein;
WHEREAS, the Company wishes to obtain the advice, contacts and expert
judgment of the Consultant with respect to the conduct of the Company's
business; and
WHEREAS, the Company desires to have the Consultant act as an independent
contractor for the purpose of providing such services to the Company; and
WHEREAS, the Consultant is qualified and willing to provide such services
pursuant to the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. Services. The Company hereby engages and retains the Consultant as
--------
an independent contractor to provide the services set forth herein. The
Consultant hereby agrees to provide all reasonable and necessary services
associated with the following: (a) assisting in the development of a
comprehensive business plan; (b) assisting in future acquisition strategies; and
(c) any other ancillary services relating to the aforementioned (collectively,
the "Services"). The Services shall be performed in Sarasota County, Florida
unless agreed otherwise in writing between the parties. The Services shall be
performed on a part-time basis, which shall require no more than 50 hours per
month.
2. Fee. In full consideration of the Services provided hereunder, the
---
Company agrees to pay the Consultant the sum of $10,000 per month, beginning 30
days following the date hereof to be payable in cash. The $10,000 per month may
be paid with common stock of the Company, which common stock will be registered
at the Company's expense on Form S-8 promulgated under the Securities Act of
1933, as amended (the "S-8 Stock") having a value of at least $10,000 at the
time of issuance. It is understood that the S-8 Stock will be sold by the
Consultant and the proceeds thereof will be applied to the payment obligation
prescribed herein. If the proceeds from the sale of the S-8 Stock do not equal
at least $10,000 per month, the Company will issue additional shares of the S-8
Stock so that the Consultant will receive at least $10,000 each month from the
sale of the S-8 Stock. The Consultant agrees that any proceeds from the S-8
Stock will be applied to the $10,000 per month consulting fees. After this
Agreement has been fully performed, any overpayment held by the Consultant shall
be returned to the Company.
3. Representations and Warranties of the Consultant. The Consultant
---------------------------------------------------
hereby agrees to use his best efforts in providing the Services and loyally
represent the interests of the Company in accordance with the Company's
reasonable requirements and objectives. The Consultant and the Company
acknowledge that the Consultant is experienced in providing the Services and
will provide the Services with the diligence and care of others in the industry.
The Consultant further represents that he has not, and shall not, enter into any
agreement during the term of this Agreement which might prevent him from
performing his obligations hereunder. With respect to the shares of the S-8
Stock to be issued in payment for the Services rendered hereunder, the
Consultant represents and warrants as follows:
1
(a) The Consultant is a natural person;
(b) He has and will provide bona fide services to the Company not
related or connected to the resale of the shares of the S-8 Stock;
(c) The Services are not and will not be in connection with the
offer or sale of securities in a capital-raising transaction, and do not
directly or indirectly promote or maintain a market for the Company's
securities;
(d) By prearrangement or otherwise, the Company has not controlled
or directed the resale of the shares of the S-8 Stock in the public market;
(e) The Company or its affiliates will not directly or indirectly
receive a percentage of proceeds from any resales of the shares of the S-8 Stock
by the Consultant, or
(f) The proceeds from the resale of any such shares of the S-8
Stock will not be applied to pay expenses of the Company that are not related to
any service provided by the Consultant.
4. Expenses. All expenses, including travel and lodging, incurred by
--------
the Consultant in the performance of the Services shall be the sole
responsibility of the Consultant, unless otherwise agreed to in writing. During
the continuance of this Agreement, the Consultant shall certify as regular and
guarantee the Consultant's situation towards all relevant tax authorities,
social security administrations and professional organizations, if applicable,
as being in conformity with the Consultant's status as an independent
contractor.
5. Insurance. The parties agree that the Company shall not be required
---------
to carry insurance or in any way insure the activities of the Consultant, its
agents, servants or employees, nor shall the Company be liable for any of the
acts or omissions of the Consultant, its agents, servants or employees. The
Consultant further agrees to indemnify, defend, and hold harmless the Company
from any and all claims, penalties, fines, causes of action, liabilities, or
threats of such actions which arise out of the Consultant's breach of this
Agreement or the Consultant's negligent performance of the Services. This
provision shall survive the termination of this Agreement.
6. Duration. This Agreement shall remain in effect for a period of 14
--------
months commencing on the date hereof.
7. Confidentiality. All information relating to the business and
---------------
affairs of the Company shall be treated as Confidential Information, as
hereinafter defined, by the Consultant both during and after the term hereof.
Except with the prior approval of the Company, the Consultant shall not disclose
any of the Confidential Information at any time to any person except authorized
personnel of the Company and its affiliated corporations, and the Consultant's
counsel. The Consultant further agrees not to use any information made
available to or coming into his possession or knowledge in a manner that is
adverse to the business of the Company. All data, records and written material
prepared or compiled by the Consultant or furnished to the Consultant during the
term hereof shall be the sole and exclusive property of the Company, and none of
such data, records or written materials, or copies thereof, shall be retained by
the Consultant after the term of this Agreement.
As used herein, the term "Confidential Information" includes, without
limitation, information and knowledge pertaining to products, inventions,
innovations, designs, ideas, plans, trade secrets, proprietary information,
manufacturing, packaging, advertising, distribution and sales methods and
systems, sales and profit figures, customer and client lists, and relationships
between the Company and its affiliated corporations and dealers, distributors,
customers, clients, suppliers and others who have had or will have had business
dealings with the Company and its affiliated corporations. The term
"Confidential Information" does not include information which (a) becomes
generally available to the public through no wrongful act on the part of the
Consultant, (b) can be shown to have been previously available to the Consultant
on a non-confidential basis prior to its disclosure to the Consultant by the
Company, or its representatives, (c) becomes available to the Consultant on a
non-confidential basis from a source other than the Company or its
representatives, or (d) is required to be disclosed by order of a court of
competent jurisdiction.
2
Notwithstanding anything herein contained to contrary, the above described
obligation with respect to confidentiality shall survive any termination of the
Consultant's engagement hereunder or the termination of this Agreement.
8. Mediation and Arbitration. All disputes arising or related to this
--------------------------
Agreement must exclusively be resolved first by mediation with a mediator
selected by the parties, with such mediation to be held in Sarasota, Florida.
If such mediation fails, then any such dispute shall be resolved by binding
arbitration under the Commercial Arbitration Rules of the American Arbitration
Association in effect at the time the arbitration proceeding commences, except
that (a) Florida law and the Federal Arbitration Act must govern construction
and effect, (b) the locale of any arbitration must be in Sarasota, Florida, and
(c) the arbitrator must with the award provide written findings of fact and
conclusions of law. Any party may seek from a court of competent jurisdiction
any provisional remedy that may be necessary to protect its rights or assets
pending the selection of the arbitrator or the arbitrator's determination of the
merits of the controversy. The exercise of such arbitration rights by any party
will not preclude the exercise of any self-help remedies (including without
limitation, setoff rights) or the exercise of any non-judicial foreclosure
rights. An arbitration award may be entered in any court having jurisdiction.
9. Attorneys' Fees. In the event that it should become necessary for
----------------
any party entitled hereunder to bring suit against any other party for
enforcement of this Agreement, the parties hereby covenant and agree that the
party who is found to be the prevailing party shall also be entitled to recover
its reasonable attorneys' fees and costs of court incurred from the other
parties.
10. Benefit. The terms and provisions of this Agreement shall be
-------
binding upon, inure to the benefit of and be enforceable by, the parties hereto
and their respective successors and permitted assigns.
11. Relationship of Parties. The Consultant is providing services on
-------------------------
an independent contractor basis. Notwithstanding anything to the contrary
herein, this Agreement shall not in any manner be construed to create a joint
venture, partnership, agency or other similar form of relationship, and neither
party shall have the right or authority to: (a) commit the other party to any
obligation or transaction not expressly authorized by such other party, or (b)
act or purport to act as agent or representative of the other, except as
expressly authorized in writing by such other party. Further, the Consultant
shall not be deemed to be an employee of the Company for any reason. The
Company and the Consultant acknowledge that the Consultant shall not be entitled
to any insurance, pension, profit sharing, retirement or other fringe benefits
which the Company may provide to its employees during the term of this
Agreement.
12. Notices. All notices, requests, demands, and other communications
-------
hereunder shall be in writing and delivered personally or sent by registered or
certified United States mail, return receipt requested with postage prepaid, or
by telecopy or e-mail, if to the Company, addressed to ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ at
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇-▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, telecopier (810)
629-9062, and e-mail ▇▇▇@▇▇▇▇▇▇▇▇.▇▇▇, with a copy to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, telecopier (713)
237-3202, and e-mail ▇▇▇▇▇▇▇▇▇@▇▇▇-▇▇▇.▇▇▇; and if to the Consultant, addressed
to ▇▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇, and e-mail ▇▇▇▇▇▇▇▇▇@▇▇▇.▇▇▇, with a copy to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq. at
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, telecopier (▇▇▇) ▇▇▇-▇▇▇▇, and
e-mail ▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇. Any party hereto may change its address
upon 10 days' written notice to any other party hereto.
13. Construction. Words of any gender used in this Agreement shall be
------------
held and construed to include any other gender, and words in the singular number
shall be held to include the plural, and vice versa, unless the context requires
otherwise. In addition, the pronouns used in this Agreement shall be understood
and construed to apply whether the party referred to is an individual,
partnership, joint venture, corporation or an individual or individuals doing
business under a firm or trade name, and the masculine, feminine and neuter
pronouns shall each include the other and may be used interchangeably with the
same meaning.
14. Waiver. No course of dealing on the part of any party hereto or
------
its agents, or any failure or delay by any such party with respect to exercising
any right, power or privilege of such party under this Agreement or any
instrument referred to herein shall operate as a waiver thereof, and any single
or partial exercise of any such right,
3
power or privilege shall not preclude any later exercise thereof or any exercise
of any other right, power or privilege hereunder or thereunder.
15. Cumulative Rights. The rights and remedies contained in this
------------------
Agreement shall be cumulative and the exercise or partial exercise of any such
right or remedy shall not preclude the exercise of any other right or remedy.
16. Invalidity. In the event any one or more of the provisions
----------
contained in this Agreement shall, for any reason, be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect the other provisions of this Agreement or any
such other instrument.
17. Headings. The headings used in this Agreement are for convenience
--------
and reference only and in no way define, limit, amplify or describe the scope or
intent of this Agreement, and do not effect or constitute a part of this
Agreement.
18. Excusable Delay. The parties shall not be obligated to perform and
---------------
shall not be deemed to be in default hereunder, if the performance of a
non-monetary obligation required hereunder is prevented by the occurrence of any
of the following, other than as the result of the financial inability of the
party obligated to perform: acts of God, strikes, lock-outs, other industrial
disturbances, acts of a public enemy, war or war-like action (whether actual,
impending or expected and whether de jure or de facto), acts of terrorists,
arrest or other restraint of governmental (civil or military), blockades,
insurrections, riots, epidemics, landslides, lightning, earthquakes, fires,
hurricanes, storms, floods, washouts, sink holes, civil disturbances,
explosions, breakage or accident to equipment or machinery, confiscation or
seizure by any government of public authority, nuclear reaction or radiation,
radioactive contamination or other causes, whether of the kind herein enumerated
or otherwise, that are not reasonably within the control of the party claiming
the right to delay performance on account of such occurrence.
19. No Third-Party Beneficiary. Any agreement to pay an amount and any
--------------------------
assumption of liability contained in this Agreement, express or implied, shall
be only for the benefit of the undersigned parties and their respective
successors and assigns (as herein expressly permitted), and such agreements and
assumptions shall not inure to the benefit of the obligees or any other party,
whomsoever, it being the intention of the parties hereto that no one shall be or
be deemed to be a third-party beneficiary of this Agreement.
20. Law Governing; Jurisdiction. This Agreement shall be governed by
-----------------------------
and construed in accordance with the laws of the State of Florida, without
regard to any conflicts of laws provisions thereof. Each party hereby
irrevocably submits to the personal jurisdiction of the United States District
Court for the Middle District of Florida, as well as of the Courts of the State
of Florida in Sarasota County, Florida, exclusively over any suit, action or
proceeding arising out of or relating to this Agreement. Each party hereby
irrevocably waives, to the fullest extent permitted by law, any objection which
it may now or hereafter have to the laying of the venue of any such mediation,
arbitration, suit, action or proceeding brought in any such county and any claim
that any such mediation, arbitration, suit, action or proceeding brought in such
county has been brought in an inconvenient forum.
21. Incorporation by Reference. The agreements referred to or included
--------------------------
herein constitute integral parts to this Agreement and are incorporated into
this Agreement by this reference.
22. Multiple Counterparts. This Agreement may be executed in one or
----------------------
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. A facsimile transmission
of this signed Agreement shall be legal and binding on all parties hereto.
23. Controlling Agreement. In the event of any conflict between the
----------------------
terms of this Agreement, the Note, the Escrow Agreement, the Consulting
Agreements, or the Stock Purchase Agreement, the terms of the Stock Purchase
Agreement shall control.
24. Entire Agreement. This instrument contains the entire
-----------------
understanding of the parties with respect to the subject matter hereof, and may
not be changed orally, but only by an instrument in writing signed by each of
the parties hereto.
4
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as of the day and year first above written.
ZANN CORP.
By
--------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
----------------------------------------
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
5
SCHEDULE 8(f)
CAPITALIZATION
Restrictions on Certificate Nos. 130 through 137 set forth in Board of
Directors Meeting Minutes dated May 14, 2005.
▇▇▇▇▇▇▇ Repayment Arrangement - ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ has been issued 7,000
shares of preferred stock (redeemable), first series. These shares have a
liquidation preference equal to $100 per share. They may also be redeemed five
years or more after issuance for $100 per share. ▇▇. ▇▇▇▇▇▇▇ owes the
corporation more than $1.2 million. The corporation and ▇▇. ▇▇▇▇▇▇▇ have an
informal understanding whereby if the corporation is liquidated or its assets
sold, these shares will be redeemed first ahead of all other shareholders and
the proceeds applied toward repayment of ▇▇. ▇▇▇▇▇▇▇ debt to the corporation.
Settlement Agreement between the Company and ▇.▇. ▇▇▇▇▇▇▇ & Associates,
Inc. ("▇▇▇▇▇▇") et al., dated February __, 2003, which settled litigation
between the parties.
Shareholder Convertible Promissory Notes - Each of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇ and ▇▇▇ ▇▇▇▇▇ hold promissory notes from the corporation or shareholder
loans to the corporation attributable to sweat equity. These obligations are
convertible into common stock of the corporation.
SCHEDULE 8(j)
LIABILITIES
All liabilities set forth on Company Financial Statement dated May 31,
2005.
Company trade, accounts and other payables incurred or accrued in the
normal course of business which would not be shown of Company's Financial
Statement under its method of accounting or arising subsequent to the Financial
Statement date.
Settlement Agreement between the Company and ▇.▇. ▇▇▇▇▇▇▇ & Associates,
Inc. ("▇▇▇▇▇▇") et al., dated February __, 2003, which settled litigation
between the parties.
SCHEDULE 8(n)
LITIGATION
Sartam Industries, Inc. ("Sartam") was involved in three cases against ▇.▇.
▇▇▇▇▇▇▇ & Associates, Inc. ("▇▇▇▇▇▇") et al., filed in federal district court
both in Florida and Mississippi and one case filed in Sarasota County, Florida.
All cases were settled and closed. ▇▇▇▇▇▇ currently holds a security interest
in a Sartam packaging machine and related hardware under a UCC1 filed in Florida
Doc. No. 200406446545. Sartam issued a $400,000 promissory note to ▇▇▇▇▇▇ in
settlement of the cases, and the remaining obligation is reflected on Sartam's
Financial Statements dated May 31, 2005.
SCHEDULE 8(p)
COMPLIANCE WITH LAWS AND REGULATIONS
None.
SCHEDULE 8(q)
DEFAULTS
None.
SCHEDULE 8(r)
PERMITS AND APPROVALS
None.
SCHEDULE 8(z)
ASSETS
Property Owned
Assets set forth on May 31, 2005 Financial Statement subject to change in
the ordinary course of business thereafter.
See Attachment.
Legal Description of Leaseholds
The Company currently leases no real property.
The Company is currently storing assets and equipment at Tampa Machine, ▇▇
▇▇▇▇▇▇▇ ▇▇▇., ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ (813) 854-3332. This arrangement is under
an oral license, and is currently without charge. The Company intends to
eventually remunerate Tampa Machine for allowing it to store such items, but has
not current agreement to that effect.
The Company is currently using as its place of business and to store its
books and records, the address of ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇. ▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇ (239) 768-6480. This arrangement is under an oral license, and is
currently without charge.
Patents, Trademarks and Copyrights
See Attachment.
Accounts Receivable as of May 31, 2005
See Company Financial Statement as of May 31, 2005
SCHEDULE 8(aa)
EMPLOYMENT CONTRACTS
Oral Employment Contract with ▇▇▇▇ ▇▇▇▇▇▇▇ with $2,000 per month
compensation, and terminable at will.
The Company has compensated various board members by reflecting amounts
owed to them on Company's books and records. Those amounts are reflected on the
Company's Financial Statement as of May 31, 2005.
SCHEDULE 8(cc)
CONTRACTS
Settlement Agreement between the Company and ▇.▇. ▇▇▇▇▇▇▇ & Associates,
Inc. ("▇▇▇▇▇▇") et al., dated February __, 2003, which settled litigation
between the parties.
Oral Employment Contract with ▇▇▇▇ ▇▇▇▇▇▇▇ with $2,000 per month
compensation, and terminable at will.
Purchase Orders with one or more customers in the ordinary course of
business.
Proposed contract with ▇▇▇▇.